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Stocks Have been Recovering

Posted by centro on Tuesday 14th of April 2020.

STOCKS HAVE BEEN RECOVERING

Many of us are still shell shocked from the events of the past 4-6 weeks, and no wonder.

An unknown virus, which was spreading across the Eastern world, hit the European countries like an express train.  Industries through-out Europe closed down, thousands of workers laid off and whole countries forced into “lock-down”.  The situation is far worse than any Hollywood disaster film could portray.

The financial markets have been seriously affected, like at no other time in history, and of course this has seriously affected the value of investments and peoples’ pensions.

From February 19th, which is considered the last “normal day” in financial markets terms, the London based FT100 index stood at 7457.  After that date panic and fear set in and all the world markets nosedived.  Over a very short period the world stock market indices fell between 30% and 40%.  Thankfully, our clients did not suffer so badly because all our client’s Investment and Pension Portfolios are spread across all the different asset classes, other than equities and also they are invested in the best performing funds for each sector.

Nevertheless everyone has seen a fall in their holdings and this was widely reported in the press and TV.  Unfortunately this has given us all the mind-set that we have suffered a loss, and it’s still there. The trouble is that the press and TV news only seem to thrive on reporting bad news.  They never seem to report the good news, and that is a pity, because things are not as bad as what we have been told.  Because we haven’t been told anything good to change our mindsets.

Here is something that supports the old saying:-  “A picture is worth a 1000 words”  This is the performance graphs of the financial indices of the four major western economies over one of the worst periods in financial history.

 

stocks.png

FT100 (UK)   S&P500 (USA)     Cac40 (France)       DAX (Germany)

These graphs show that the low points of these financial markets was between 16th -23rd March.  However, since then all the world markets have recovered and enjoyed a rise of differing degrees of between 15%-28%.  No news of this in the papers or TV.

Fear and panic have been contained.  There are now more buyers than sellers and reason has returned to the financial markets.  Stock markets largely perform to reflect what is anticipated to happen in the future and this picture suggests things are on the turn and will be better than now. 

To those who have spare money to invest and are prepared for a degree of risk, now is a good time to invest a proportion of their funds.

To everyone else who need more assurances in their investments, Let’s wait and see.

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