Are we there yet? Well, wherever we are going, the answer is ‘no’. Stock markets are mechanisms of prediction; arenas where millions of participants’ opinions are distilled into price movements. As a rule, the more uncertainty present, the greater the level of volatility. As markets grapple with when the world will return to some kind of normality, its assumptions lurch from the optimistic (12 months, perhaps?) to the apocalyptic (normal isn’t returning, at all).
The last few weeks illustrate the dilemma all governments now face. Business as usual inevitably entails the relaxation of lockdowns. However, the predictable result is a resurgence of Covid-19 infection rates ….. which brings localised lockdowns back on to the agenda and perhaps even a return to the more draconian quarantines of the Spring. We have no epidemiological insight but we’ll make a prediction. As time passes, herd immunity will become all governments’ de facto policy because not to do so is ultimately untenable. Paying swathes of the population not to work with mind boggling amounts of borrowed money risks systematic economic collapse.
Nevertheless, good businesses will, in general, find a way through. To where and at what speed, we don’t know but we remain convinced that their acquisition/retention offers the best chance of a pleasing long term investment outcome.
