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Holly's Blog: Financial Morrissey mood music, Brad Pitt and guinea pigs

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The yo-yo of global stock markets continued this week as the main US index had its worst day since mid-March yesterday, falling by 6%. Covid cases are rising in the States and the Federal Reserve’s mood music is Morrissey after he’s been dumped and force fed McDonalds (tweet this).

 

Things are equally financially bleak over here as new figures confirm the economy fell by a whopping 20.4% in April. Compared to “modest” falls of nearly 6% in March.  This chart from Bloomberg shows the scale of the hit. All because of some miserable bat. Looking at this chart, and then looking at the stock markets, you can see how hard the central banks have been working behind the scenes to keep the stock market show on the road.

 


OK misery guts but what to do?


I talked to a few CEOs of some of the DIY investment services this week to gauge what they’re seeing. Business has been buoyant for them – people have been trading, investing and mostly buying.


Buying "what", depends on the customer base. Those platforms from a stockbroking heritage have seen huge volumes in individual shares and ‘ETFs’. (If you want to get your heard around ETFs, we’ve an article here or there’s a simple video from BlackRock on our funds pages, explaining them). And those who typically look after a less confident, generalist investor report flows into global funds and also passive funds.


Even those services catering for the newcomers or the less confident – such as Moneybox or Wealthify – have seen chunky growth in customer numbers since the start of the year.


To have a nosey at what people are buying, these links will show you the top 10 funds bought on Hargreaves Lansdown and the main funds and investment trusts bought on Interactive Investor  in May.


It’s a global and tech love affair


For what it’s worth, the common denominators on these 2 largest platforms are Baillie Gifford American, Baillie Gifford Global Discovery, Fundsmith Equity, L&G Global Technology, Lindsell Train Global Equity and Polar Capital Technology.  As always guys, this is for interest and is not a list of recommendations. Sometimes the wisdom of crowds is also the exuberance or the folly of crowds.


I don’t personally have any specific technology funds. In part that’s still a painful hangover from losing piles of cash in the 2000 dot.com, because of my own silly greed – technology funds have become my investment equivalent of tequila. I’ve been so sick on it that I can’t go back. 


But also, have a look at any global fund you have. Or any workplace pension, for example. You will already have more in Amazon, Apple, Facebook and Microsoft than you can imagine. Let’s look at another option – bestseller Baillie Gifford American has 22% invested in software and computer services. The main thing to consider here is diversification as always. Don’t assume you are diversified just because the funds you own sound different. Do check out the top 10 holdings and make sure you do indeed have a raft of different things from different sectors and geographies.


Unless of course you are purposefully betting the house on technology or healthcare or whatever. On that, I’ll leave you with a final thought from one platform boss. He pointed to data from the States which suggests that some of the uptick in the US on share dealing sites is because all sports betting has been off. So people have been looking to make their punts in other ways…if you can’t stick £50 on the 3.25 from Newmarket, you may as well buy housebuilders, hospitality and airline stocks*! Gulp.


Have a lovely weekend everyone. The kids and I have been musing about who gets the prize of being our Support Bubble. My daughter is hell-bent on a lovely family in the village we don’t know that well, because they have a guinea pig and a trampoline. I’ve been amusing myself with the idea of a sort of post-modern reverse kidnapping – forcibly and publicly getting within 2 metres of someone such as Brad Pitt (for example) so they have no choice but to take you in. My son is being much more sensible although anyone with an interest in Star Wars and Arsenal is riding high.


Just imagine if Brad Pitt likes Arsenal and has a guinea pig!!!....

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