Dear valued client,
As I write this we are still uncertain how many of us will be fully prohibited from spending any time with our loved ones this Christmas period. This uncertainty will sadly continue for the foreseeable future.
And with another Christmas upon us, nearing the end of what can only be described as the most strangest, scariest, volatile and unimaginable year, we find ourselves asking the question what is normal? As the world continues to be gripped by the fast spreading and dangerous global virus, both the political scene and the global economy have had to play second fiddle. This is unheard of under ‘normal’ conditions when very important decisions still need to be made on Brexit negotiations, trading terms across the world and the future of our economy, but we are not in ‘normal’ conditions.
But are we seeing light at the end of the tunnel? Not one but 3 vaccines are now approved and out in the public domain, Donald Trump will leave the White House on January 20th and, a deal to continue trading with Europe still shows positive signs.
So what have we learned during this very difficult year?
- A global pandemic can spread very quickly as we freely move from country to country. Mother nature often gives us a stark reminder of who really is in charge.
- Businesses have had to learn to be even more efficient to keep trading and maintain profitability. Offices are closing across the UK following successful ‘forced’ tests of home working.
- Government pandemic planning has not been plain sailing. Is there such a thing as a good pandemic plan? Has the rule book been thrown out of the window? U-turns are being made almost on a daily basis.
- In a time of crisis people either pull together or hold out for themselves. We have experienced both sides of the fence in the UK.
- Balancing both the economy and lives proves to be a very tricky challenge for any leader. How do you lockdown to protect lives when you need the wheels to turn to maintain livelihoods?
- Many businesses are fickle. Even a short-term setback can disable and even close many of what were expected to be solid national and global brands.
- Stock market volatility continues to be driven by sentiment. In the first 6 weeks of COVID-19 reaching the UK the FTSE100 dropped by 36% (down to 4943 points on 16th March), rebounding by 32% within 8 months upon announcement of an effective vaccine (6546 points on 30th November).
- We live, we learn and we evolve. A vaccine out in the public domain safely, and within just 10 months creates an historic moment and demonstrates how well we have evolved! Previously it has taken on average 4 years to get a vaccine prepared, in trials and a successful launch.
- Good quality advice of investing for the long-term demonstrates its worth. Prosperity’s portfolios have held strong, weathered the storm, and in the majority of cases have gained a few points since the start of the pandemic.
So what can 2021 bring?
Initially and potentially more of the same in the 1st quarter while the vaccine is being properly administered. There will be a race against the clock as the world attempts to stem the mutation of the virus. However, economies and businesses have structured themselves the best they can using the last 12 months actions and key learns. This places them in a good position to benefit from the upside as the world adapts from the virus and green shoots begin to appear. Risk and Reward come in equal measures, and improving economies and well-structured portfolios will almost certainly benefit forthcoming stability.
What is Prosperity’s view?
It will come as no surprise that the short-medium term outlook for investors continues to be difficult. Volatility in portfolios are at an all-time high (even in low risk portfolios) as all asset classes are seeing volatility spikes as a result of the growing pandemic. However, as long as you invest in high quality assets and diversify your risk as much as possible, the volatility will be minimised and you should remain on track to meet your long-term investment objectives. There is a lot of ‘panic’ in the world but we believe this should not be the case with your investments. We believe in active management and are continuing to monitor all portfolios to maximise the ‘right’ opportunities when they present themselves, as well as testing the risk levels and objectives of existing assets to ensure suitability.
Trust in our expertise
As previously mentioned, we have over 200 years of experience and expertise within Prosperity and the majority of our Advisors have both witnessed and experienced major fiscal and economic impacts over the years including terror attacks (9/11), the financial crash of 2008, ‘Black Monday’ in 1987, Tsunami’s and many global recessions. We lean on this expertise through challenging times like today and stay true to our clients financial objectives whilst managing the risk as best as possible. Our view is to stick to your long-term financial goals, make the most of a down-market (i.e buy when assets are ‘cheap’) and trust in the professionals to help you through the difficult periods.
We have all been impacted by COVID-19 and sadly it does appear that there is more to follow until the vaccines are fully administered and become a ‘normal’ part of our future lifecycle.
I would like to close by letting you know our Prosperity team have worked tirelessly to protect themselves, you and your portfolios. I am pleased to confirm we are all safe and well here and have consistently been following the government guidelines, whilst trying to continue with ‘business as unusual’. I am very proud of the team as they have throughout this demonstrated their professionalism and desire to continue placing you, our clients at the top of their priority lists.
It leaves me to wish you all a safe and merry Christmas, and let’s hope 2021 brings us all joy and prosperity.