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Hi All

Covid seems determined to continue dominating and affecting life across the globe. Where it was hoped the virus was being brought under control, it has flared up again bringing back containment measures in whole or in part.

Given the world’s experience of the financial effects of those containment measures, the battle between pro and anti lockdown is set to continue. Business failures and job losses are escalating, keeping pressure on governments to balance managing medical facility availability and burgeoning humanitarian crises at the same time and with the same already-obliterated budgets. One does not envy them their task, but opening economies post initial lockdowns looks at best to be having debatable results.

Will there be a vaccine?

Thankfully recent positive developments in human trials of vaccine candidates has raised hopes of some possible relief in the future. These are still only early indicators and are not yet classifiable as breakthroughs. Conjecture is mounting as to the speed at which regulatory approval will be granted to these solutions, the pace at which they can be manufactured and distributed and exactly who will be first in line. Britain was this week reported to have pre-ordered 100 million vaccines. Interesting, seeing as their population is only some 60-odd million.

Other reports are that it is conceivable there will be multiple vaccines becoming available within a similar timeframe which is also good news. Without a vaccine, it is difficult to see the world getting back to anything close to what we would like it to be anytime soon. So fingers crossed.

Markets remain uncertain

As much as there has been a sharp, basically V shaped market recovery on major exchanges, uncertainty is still around. Although investors are trying to look past the crisis and see a brighter future on the other side, regular lapses in confidence bring sharp drops in valuations over particular periods. So far these have all turned out to be short and prices recover within a few trading sessions.

News flow largely determines these swings, either bringing hope or despair depending on whether it indicates economic expansion or contraction. In my experience, these are not markets one wants full exposure to. Wild fluctuations in prices of the same asset from one day to the next are more speculative than long term investing and therefore dangerous to one’s financial wellbeing.

This being said, the next few weeks could provide increased clarity on the way forward. Dependent on whether vaccines become a reality or, as some experts suggest, the actual peak of the virus is within sight, more attention can be paid to the economic fundamentals of the world’s situation.

This will be a far more reliable base to work from in classic terms and will either show that current market valuations are fair or not. I eagerly look forward to that time coming so together we can advance your families’ interests.

More next time

Kind regards,

Ricky Williams.
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