Watching the FTSE 100 this week was a bit like watching a teenager at a party.
Over the last month, it’s been swigging the cider, getting steadily more worked-up and chatty, dancing upwards. Over the Atlantic and the American money jocks have also been jiving – after March’s carnage the S&P 500 was up by 13% in April, the best monthly performance since January 1987. But then yesterday, the FTSE stumbled, groaned and stuck its head down the financial toilet bowl as the party came to a temporary end.
I wrote about the oil companies in last week’s blog, and yesterday Royal Dutch Shell cut its dividend for the first time in 80 years, adding more pain to those who rely on their investment or pension portfolio to pay out some regular cash, and challenging the old adage “never sell Shell”.
Our high streets continue to come under pressure and change face – Oasis and Warehouse have permanently shut up shop. Amazon and Sainsbury's have reminded us that revenues are not the same as profit, as the costs of doing business escalate along with money taken at the digital tills. Amazon’s revenues were up by 26% from this time last year, but profits were 29% lower. Airlines have been decimated (temporarily?). Lloyds and today RBS have reported bad numbers – RBS pre-tax profits fell by 49% in the three months to March. Only a few firms have done well, including Reckitt Benckiser which makes disinfectant! Sales jumped by 13% in the three months to March as the fight against germs saw us splash £3.5 billion on Dettol, Nurofen and other brands.
I don’t know about you guys but this week has felt as though someone amended the laws of physics and time went s-l-o-w-e-r. If we received a school report on life, mine this week would be a D and a resounding Could Do Better. This week has sucked.
The big question we all have is When? From the perspective of someone running a small business, future planning has never been harder. We have a 200 person conference booked for late September. But I need to make the decision now. Roll the dice? Or postpone? I can’t wait until the summer to make this call. And neither is this just a question of supply – we may well be able to go ahead but will there be any customer appetite to come along? With fear still clearly high – as evidenced by how people leap out of our path on our daily walk as if John Merrick is ambling towards them (which to be fair is increasingly what I feel I look like) – the When? question is not just one for policy makers and scientists, but for all of us too.
All over the world, businesses are grappling with questions like these as unprecedented use of the word unprecedented makes decisions harder than ever.
Boris may see light at the end of his Alpine tunnel. But I’m afraid there will be plenty more puking teenagers on the stock market pastures along the way*. How to respond? For diversified investors, I still think it's best to just go to bed and let the kids thrash it out in the FTSE basement.
Have a lovely weekend
Not so jolly Holly
(*Readers forgive me! I did nearly delete that but it was so negative and gross I’m afraid it has made me laugh! It is also one of the joys of writing for my own publication and not a national paper where this week’s column would have of course been deleted by a tutting editor. Normal and more jolly service will resume next week! )
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