Wall to wall sunshine, Covid-19 cases falling, lockdown easing, world stock markets posting a good recovery, live sport returning. No wonder we are all feeling better.
So why do I feel so nervous about what June has in store?
World stock markets have been incredibly resilient over the last couple of months with the USA leading the way, but it seems to me that too much good news has been factored in and the ongoing risks have been understated. In the US we have seen widespread riots, an easing of lockdown which may be far too early, unemployment at levels never seen before and a President who has abdicated all responsibility to State Governers.
In the Uk, we are introducing a test, trace and track system with no evidence whatsoever that the public has bought into what it means for them. The Korean experience is totally irrelevant. They have access to mobile phones, credit card statements, CETV, and a population which accept a high level of State intrusion. We are relying entirely on voluntary compliance just at the time when people already have had enough of lockdown and all that brings.
The economic consequences of the virus will not be known for many months. For example restaurant takings in China, some months after their lockdown was eased, are still only at 40% of pre-virus levels. The travel industry will take even longer to recover. Savings levels in the USA are at record levels. With reduced consumer spending any recovery looks very fragile
Is there any good news? Progress towards a vaccine looks very promising and a breakthrough there could give a big boost to confidence. However, if anything goes wrong it would have a very negative effect.
So, what should investors do? Don’t be sucked into markets just now unless you are investing on a regular basis and are happy to accept average purchase prices over the next few months. Check your cash levels and be absolutely sure that you will not be panicked into selling if there is another significant market setback.
If you have some spare money and would like to see if you could benefit from ongoing stock-market volatility check my recent blog – stock market trading – just for fun
All of this once again shows the importance of having a well thought out and structured financial plan. If you have an adviser who has been in regular contact over the past few months you are probably in good hands. If you are paying ongoing fees to an adviser who has not been in contact the alarm bells should be ringing and I suggest you phone me, Richard, for some guidance on 07770575122.
For those of you using the non-advice on-line services such as Hargreaves Lansdown, you should be paying attention to what is going on and making sure that you have a well understood and deliverable process in place. If you have any doubts book in for a complimentary 15-minute Zoom chat and learn about how my “guidance” service could help you.
I hope I am wrong and June turns out to be another positive month but be prepared and don’t be surprised if we start to pay for the May good times.
Retirement Risk Zone: If you are in what I call “The Retirement Risk Zone“ – the three years before retirement and the three years after – this is a particularly important time for you so do please get in touch, just use this link to book a free 30-minute Zoom chat. Make the wrong decision now and it could have a major impact on your lifestyle for the rest of your life.
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