Since our last update we have been very busy implementing some key changes within the business which were touched upon in our last newsletter, this is to improve our processes and more importantly give greater value to our clients.

The first stage of our improvement programme was to enhance our website in order to facilitate a new Client Portal which allows clients, if they wish to, secure access to all their portfolio information in one place.

The second stage was the configuring and implementing of our new back office system -Intelligent Office; this allows us to work more effectively, by way of detailed research analysis and access to information on one platform, to streamline our business processing.

All of the above is by way of enhancing our investment proposition; the personal, bespoke advice service we provide our clients will always be at the core of everything we do both now and in the future.  The decisions we have taken over the past few months are to enhance the service we offer our clients, one which meets your requirements in this fast and ever-changing world.   We have implemented the latest technology available to enable us to spend more time on the things that matter… you, our clients.

The final part of the changes was to ensure we could reopen the office to our clients, and we are pleased to say that client meetings can now take place within the office.  To enable us to do this, we have put in place measures to ensure we are operating in a safe environment for the benefit of both our clients and staff.  A member of staff will run through the precautions we have in place prior to the meeting taking place. 

On the subject of staff, we are pleased to announce a new member of the team.  Simon Hill has joined us in a new role, to P J Aiken, as a paraplanner.  Simon has previously worked as a paraplanner, in Wimborne, and is more than happy to not be doing the daily commute and is playing his part in reducing CO2 emissions as he lives in Dorchester and walks or runs to work every day.  

Market Overview

Are we nearly there? How often have parents heard those immortal words en route to a holiday destination or on a journey to see a distant relative? Well, it’s the question we have been asking ourselves all through the Summer months and we are still struggling to come up with an answer!

At the time when markets took fright as the likely impact of the Coronavirus outbreak began to dawn on investors, little did we realise where the journey would take us or where it would end. Some panicked and liquidated all or part of their investments; whilst others simply sat tight and waited for things to calm down.  So, who was right and who was wrong?

Well, the effects of the Covid-19 pandemic have been devastating. Governments have pumped billions into their economies, so much of the world has been heading towards recession. However, most observers see this as temporary and expect economies to rebound quickly hence the recovery in markets since the dark days of March. The lifting of lockdown restrictions in many countries has been seen as a positive step and evidence of economic recovery is beginning to emerge. The problem is that we have no way of knowing how serious a second spike may be as we go into the winter months.  This is one of the reasons why markets have flattened out in recent weeks.

Uncertainty over the outcome of November’s Presidential Elections in the US is another. While Joe Biden has moved ahead in the polls, the US market has faltered. The election of a Democrat as President is generally regarded as being negative for US markets whereas the election of a Republican is seen as positive. However, the facts don’t bear this out as more often than not, the election of a Democrat has been good for markets, so if Joe Biden wins, the impact might not be as dire as Donald Trump would have us believe.

Given that it is difficult to judge what’s around the corner in pre-Covid times, now it presents a far greater challenge for analysts and market strategists to make predictions with any degree of confidence. Much will depend on the speed of developing an effective vaccine and making it available to the wider public but if the pandemic drags on for any length of time, without a vaccine, it could have dire consequences for some quoted companies.

What we do know is that there are companies which have benefited from the Covid-19 pandemic. These are technology and logistics companies as well as those that rely on technology to deliver their services such as online retailers. So, the Coronavirus crisis has been instrumental in hastening the move towards more people working from home and shopping online. It has been suggested that this has resulted in the shares of such companies being pushed up to unsustainable levels, with the result that we could be facing another technology bubble such as the one seen at the end of the last millennium.

Whilst this might seem a logical argument, things are very different this time. In the late 1990s, many quoted technology stocks were ‘start ups’ with huge amounts of debt incurred to develop their ideas, but most were generating little or no profit. The atmospheric share prices rises seen at the time were based on what return on capital investors hoped these companies could generate in what was being described at the time as a ‘new paradigm.’ Sadly, the vast majority failed to deliver and fell by the wayside!

Move forward another 20 years and the technology companies that are thriving today are those that survived and have grown into multi-billion-dollar giants of their industry. By contrast with the position at the time of the technology bubble at the turn of the century, their share prices are based on the huge sums that they are generating. While some might argue that their share prices have moved ahead of events, there is no denying that these companies will continue to grow strongly in a post-Covid environment.

On the other side of the coin, many companies will continue to struggle even after the crisis has passed. Many cyclical businesses found life incredibly difficult during the lockdown and are facing an uncertain future even though many of the restrictions have now been lifted. The UK has a higher percentage of companies that fall into this category than most of the world’s markets.  This has been a contributory factor in the underperformance of our market relative to other developed markets. As mentioned previously, the lack of a trade deal with Europe is another.

Some argue that the underperformance of the UK market has been overdone and that the values of many UK shares are incredibly ‘cheap’, but there has been little evidence of any narrowing of the gap between the UK and other markets in recent months. While we are nervously waiting for the outcome of trade deal negotiations with Europe, this is unlikely to change.

Against this background, our advice remains to ‘sit tight’ and await a return to more settled conditions. It is rarely, if ever, right to panic in a crisis as the events of last six months have clearly demonstrated. Markets always recover from shocks and often more quickly than people might imagine. There are still many uncertainties to be faced but we are beginning to see a little light at the end of the tunnel.