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Contents Click on the links below to get to the stuff you really really want. USA – Second wave sends stocks reeling; Travel and leisure worst hit; Bond investors fairly sanguine (#USA) UK – Stocks tumble; Rolls Royce plummets on rights issue approval (#UK) Continental Europe – Germany back in lockdown; Stocks tumble; Delivery Hero up (#Europe) Elsewhere – Australian stocks fall most in Asia Pacific, Chinese stocks up (#Elsewhere) WTF – Keep emotions out of investing (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
It’s probably fair to say that we’re experiencing a second wave of Covid-19. The sense of fear and camaraderie during the first phase appears to have been replaced with jaundice and impatience, which doesn’t help to combat the virus.
In the US, the number of new cases on Wednesday was above 70,000 again, taking the average weekly number to a record of more than half a million. This is bringing about a return in lockdown restrictions (albeit more so in Europe than the US), and that’s awful for an already battered economy.
The election is next week and a stimulus package being approved and implemented before then ain’t gonna happen. So stocks tumbled, leaving the S&P 500 a painful 3.5% lower on the day.
Various companies were posting their results yesterday, General Electric being the notable winner, it closed the day 4.5% higher. Meanwhile travel and leisure companies were absolutely battered with CH Robinson Worldwide, Carnival and Norwegian Cruise all tumbling by between 9.1% and 11.5% in just one day.
Bond investors appeared to be relatively unmoved as the demand for and prices of benchmark 10-year Treasuries (government bonds) rose a touch during the day, only to fall again in later trading. I take this to be another instance of bond investors having a longer-term outlook and being more focused on trends rather than the latest round of data.
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UK
Virus cases and tightening restrictions were plaguing UK stocks as well. The FTSE 100 and FTSE 250 dropped by 2.6% and 1.9% respectively on the day. Every sector in both indices fell in value with utilities, oil, basic materials (mining and chemicals) and travel and leisure having the worst of it.
Carnival, Firstgroup and Cineworld all slumped by around 7.0% or more. This was nothing compared to the 61.4% collapse of Rolls-Royce (aircraft engineering) shares after it approved a rights issue – i.e. a fairly desperate move to raise cash by allowing existing shareholders to buy more shares and, therefore, dilute the value of the shares that have already been issued (i.e. there are more shares and shareholders taking a portion of the overall profits (ha, profits)).
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Continental Europe
Germany is back in lockdown… DAX down a painful 4.2% on the day, Euro Stoxx 50 dropped by 3.5%. Anything export-related from Germany was particularly badly hit, but little in Germany had a good day. The exception was Delivery Hero which closed 1.7% higher – it stands to gain from more lockdown restrictions as that’s what’s been driving its rise in revenue this year.
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Elsewhere
With the likely lower output and lower demand for minerals, the Australian S&P/ASX 200 stock index is the biggest faller across the Asia Pacific region this morning. Chinese stocks continued to march upwards as that country’s economy appears to be recovering.
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WTF (What’s The Fact?)
Keep emotions out of investing
A serious note from me here. You can’t time the market, i.e. know when a stock price is at it’s highest or lowest and therefore the best moment to sell or buy. So it’s best not to try. At times like this, I tend to make a cup of coffee and do something else because I’m comfortable with my investment portfolio – I set it up in such a way that, when the downs and ups occur, I don’t get emotionally involved.
Emotion is the enemy of the investor. Set up the portfolio correctly and give it time. Then go off and live your life while your investments do what they will. If you’ve done things properly (including setting up a cash buffer before putting money into investments) then you’ve controlled the controllable. Don’t fret over the uncontrollable.
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Links
Investopedia (www.investopedia.com/dictionary/) – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point Guffipedia (ig.ft.com/sites/guffipedia/) – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies Guardian (www.theguardian.com) – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott) Times of India (timesofindia.indiatimes.com) – Why use five words when 37 will do? Daily Mail (www.theatlantic.com/magazine/archive/2016/07/the-war-on-stupid-people/485618) – Click it. I dare you.
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———————————————————— IMPORTANT This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you’re unable to recognise the devil’s ear wax when you see it, then you’re on your own.
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