Are we there yet?

There will be no trumpet fanfare or bell ringing to signal it’s now safe to come out. Nobody will wave a starting flag if past market corrections are anything to go off, that officially commences the rally. Slowly the good news will start to be seen amongst all of the bad news. Imperceptibly attitudes will change and business as usual will return, along with the investment markets commencing their gradual recovery.

Our 30% market falls were sudden and indiscriminate. It’s often said that market gains take the stairs up, but the lift down. Actually to be precise “markets take the escalator up but the elevator down”. The difference matters as we start to see the first glimmers of a slowdown in deaths and new cases in Italy, but new cases are doubling daily in New York. As I always say, markets are moved by what the Americans think rather than what we think and right now it looks like the deaths in America will exceed everywhere else on the planet combined. There are just so many older and at risk individuals who live there and healthcare isn’t free.

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The world is all in the same boat

It’s important I keep you all informed at times of stress like this. I know many of you will be worried. 33 years in this business has armed me with the kind of experience that will certainly help us all once we get through this volatile period.

I have said it would continue to be a rocky road, right up until the end of the month on 31st. Then I believe the markets will settle as the next quarter starts. I believed that there had to be many forced sellers in the market, now I’m starting to see the proof of that hunch.

hedge fund wipe out

We are all investors for the long term. We inhabit markets though with many gamblers. Institutions that borrow huge amounts, combine it with huge amounts and then let it ride to the end of the quarter when they are forced to settle up. Winning often, but when events turn against them potentially losing everything. Here’s an excerpt from a note from a knowledgeable expert that I have followed for the last decade:

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Covid – 19 Precautions

In line with government recommendations we have elected to commence working away from the office from today.  I’m sure many of you will be doing the same. Please contact us on the usual email addresses, [first name]@hjscott.co.uk directly in the first instance if possible, rather than via the telephone until further notice. If you prefer to discuss things over the phone, just ask in your email and we will call you back.

business as usual plan

Our business has been fully cloud based since 2011. It has allowed me personally to work everyday day, irrespective of whether I was in the office or not. I do not see any changes being required to comply with any future home lock-down which could arise. The only real difference will be that the team will be conversing via FaceTime rather than face to face. Our operation can function via either broadband or the mobile telephone network.

We will be calling into the office once a day to pick up any post.

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I’m here to remind you

The current events require me to act just like the coach of the team who emerges victorious from FA cup final.  It’s match day. All the preparation has already been done before the game. Throughout the season, we have beaten most of our rivals already. It’s now to be left up to the players to go out there and do exactly as they have been drilled to do.

But right now we are behind.

Half time talk

It would be fair to say that the first half was brutal. We played well, but there were forces out there much greater at play. Now isn’t the time to explain exactly what’s gone on in the world, but briefly.

The world is panicking with Covid – 19 and Saudi Arabia has chosen this exact moment to try to reach for glory by killing off all opposition. Both its rival oil producers and to a fair extent its religious rivals in Coronavirus hit Iran. It isn’t the first time they have tried to kick opponents when they were down.

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“Freefall Friday…”

I know that Corona Virus exists in bats and that it was first discovered in the 1960’s. Bats thankfully are still with us 50 years later, they have probably lived with the virus for millions of years. Humans suffer from about 160,000 different viruses, whereas there are an estimated 6.4 million in the animal kingdom. I know we can’t catch the virus directly from bats, that there must have been an intermediate host such as a pangolin which is a scaly anteater. More importantly I know that a Chinese viral research unit exists only 300 metres from ground zero of the virus outbreak, where work was being done on the viruses bats carry. But I can’t help you with any of this virus knowledge that I’ve researched.

No, you don’t rely upon me for my general knowledge. I’m relied upon for my investment knowledge. So has my thinking changed since I last blogged a week ago? What did I say?

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