Market Update: “The stock market is a device for transferring money from the impatient to the patient” (Warren Buffet)
✔️ March and Quarter 1 have come to an end. The steady increase in value of developed markets continues…Emerging giving a little bit back after a good run..raw data being
S&P 500 +4.2% +5.8%
Nikkei +1.6% +7.3%
FTSE +3.5% +3.9%
MSCI W +3.1% +4.5%
SSE -1.9% -0.9%
EM50 -4.3% +2.1%
✔️ And on the currencies, what was an undervalued US Dollar started clawing its way back against other currencies, data being..
GBP +1.0% -1.3%
EUR +2.9% +3.7%
JPY +3.8% +7.1%
AUD +1.7% +1.9%
CNY +1.4% +0.6%
✔️ Its now been over a year since we first heard about the Covid 19 virus and 12 months ago many countries were entering their first period of lockdown and the air of uncertainty was at it’s highest since the second world war.
✔️ Understandably the market update: March 2020 saw the markets take a huge tumble as uncertainty is what they dislike the most and hundreds of billions of dollars were wiped off of portfolios. Much talk at that time was about the shape of the recovery (note there was always going to be one). Would it be U, V, L or W. A year on we can say it was indeed V shaped and the assets of those who stayed invested in the S&P 500 are 60% higher than they were a year ago. This 60% gain is double the 30% fall that occurred between Mid February and Mid March when this then unknown virus started to change many people’s lives.
✔️ This once again illustrates the importance of keeping a cool head in situations like this. Don’t panic sell. If anything seek buying opportunities at good prices. Have faith in the good companies you own and they will come good. To the extent of a 30% profit for those who stayed invested.
✔️ In it’s last trading day of March, the S&P 500 very nearly broke the 4,000 mark, a milestone I expect to see during April.
✔️ It was February 1998 that the market first broke the 1,000 mark. It then took over 16 years to breach 2,000 in October 2014, just five more to reach 3,000 in October 2019 and assuming next month we do get to the 4,000 only two and a half years to get here.
✔️ As you can see the pace of growth has accelerated. This is due to the amazing technological innovations we have seen over the last 20 years. This is having an impact on the world over. Urbanisation in Emerging markets driving a consumer led economy. More people buying tubes of Colgate toothpaste, Dove shampoo, going to Strabucks, gaining access to healthcare…I think you get the picture
✔️ And that’s not even to mention the tech giants. I spoke in last month’s blog about how there is still around half of the world’s population without internet access and how this number will reduce daily. No one will stop using the internet once they have access, but many will start.
✔️ The number of Facebook users increased in the last 12 months by 200 million. This would represent the 8th most populous country in the world, in between Bangladesh and Nigeria. When you also consider that virtually none of these new users would have come from China, this highlights the growth of the consumer even more acutely.
✔️ Every new Facebook user is now subjected to the advertising that will lead to consumption which will lead to growth.
✔️ Many companies that trade on the S&P 500, whilst American have a global footprint. It’s this footprint which will continue to see good companies in good sectors grow..