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Holly's Blog: Sulky Donald Jolly Markets

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Well what a slow news week this has been. Back under house arrest. Furlough extended until March at an estimated cost of £6 billion + a month. And the US…where to start!?

 

Rather weirdly, against this messed-up backdrop, stock markets have played the part of the sage benevolent grandparents in the global room, watching calmly as the toddlers rage around, seemingly able to block out the noise. The FTSE is up for the week. And in the States, both the S&P 500 (broader stock market) and the NASDAQ100 (tech-focussed stock market) are up for the week, the last 6 months and over the year.

 

So what is going on over The Pond?

God knows, is one way of putting it. But looking at Wall Street expectations, there’s a lot of commentary about a divided outcome in the US – expectations seem to be a Biden presidency and a Republican Senate. This is thought to be the best of both worlds for growth shares* – including the tech giants. Biden will be assumed to play more nicely with China and to generally improve trade relations. But Republicans in the Senate will make it harder for a Biden Government to come down more heavily on tech firms, introduce tougher regulation and levy higher corporate taxes.

 

Loosely put - you lose the Tweet-tastic anti-trade Manbaby at the helm. But keep enough money-lovers in the Senate to stop the more lefty-stuff which spoils capitalists’ fun from getting through.

 

More than a few analysts have predicted we might see a surge of 10% amongst US growth stocks in the coming months. [Warning – analysts’ views are best taken with a pinch of sceptical salt.] Reading the commentary out there, I’d imagine we could see tech, robotics, healthcare, work from home and 5G as popular themes with investors. If you are interested – and remember that trying to predict markets and take specific bets is at the hardcore end of risk – then ETFs can be a good way to access themes or sectors. Exchange Traded Funds are just baskets of shares, grouped by a common region, sector or theme, which give you exposure to 100s of shares in one single product which you buy and sell online like a share. It’s an easy and cheap way to invest.

 

So – for example – I have the Invesco Nasdaq 100 ETF, rather than fiddling about trying to work out which individual US tech shares to buy. If you like the biotech theme, there’s an iShares Nasdaq Biotech ETF. If you need a Trump antidote and climate change is your thing, interestingly the iShares Global Clean Energy fund was amongst the top 10 ETFS bought in October on major investment platforms.

 

Closer to home…..

The UK is of course a different story. Not to plunge you all into a pit of rapid despair, we also have the B-word looming. We know from our research that investor sentiment about the UK has continued to fall, and was lower at the end of September than at the end of June and the end of March. And the shine has gone off UK funds.

 

As for quite what the Government has in store for us, the furlough announcement came as a surprise to many. The arguably crude approach, cooked up quickly earlier in the year, with no attempt to target sectors or viable jobs, has been criticised by some. Support through the Self-Employment Income Support Scheme (SEISS) will be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

 

If you’re idly wondering why we’ve been told this lockdown will last for 4 weeks but furlough has been re-introduced for over 4 months…..trying to unpick that one is a labyrinth of politics, personalities, egos and opposing agendas.  It feels a bit like telling a whining toddler that “we’ll be there in 10 minutes darling” when you’re still 20 miles away. Anyway. Enough already! And repeat after me……..The schools are still open.......................The schools are still open ………...The schools are still open ………….and breeeeeathe………..

 

What are our wise old crowds up to?

In the absence of sage leadership, let’s have a final nosey at what everyone else has been up to. We have been busy working away to collect data from the largest UK DIY investment platforms to bring you the lists of most bought funds, investment trusts and ETFs in October. Have a squizz here. In summary – it’s a story of global markets, Baillie Gifford, Fundsmith and Vanguard, US funds, a reappearance of Japan and renewed interest in China.

 

Have a nice weekend everyone. I am extremely excited to have optician appointments for the children booked tomorrow. Who would have thought that a trip to Boots Opticians in High Wycombe would be the pinnacle of my social calendar for November 2020. I sweat rock’n’roll from every pore.

Holly

 

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*Loosely put, there are two main styles of shares. ‘Growth’ – shares which might look expensive today but which are thought to offer huge growth potential and so people think they’re worth it. These are the sexy companies which people like to wrote about. ‘Value’ shares are the more square and boring types. They may be more established, more set in their ways, and not so pricey today – but they’re not going to shoot the lights out in the future. They just might be unloved and so money can be made in picking them up cheaply. Advocates of this style will argue it’s much ‘sexier’ to buy shares in a company which makes money, than it is to buy shares in a company run by someone with big ideas and a beard.

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