It’s not all bad out there…

04.09.2020

Earlier last week the S&P 500 index (a market capitalisation-weighted index of the 500 largest US publicly traded companies) completed its fastest recovery from a Bear Market in history. At its lowest point, year to date, it was down just over 20%, but at the time of writing it is up just over 10%. It’s madness.

Anyone with half an eye on the parlous state of the world economy may agree that this is quite extraordinary. The pandemic has caused enormous pain on global businesses with dividends being slashed, companies announcing mass redundancies and recurring profits warnings from the great and the good.

Investment markets have many drivers that determine its pricing, which I will not bore you with here, but there is an adage in the industry that there are 3 things you need to know about the stockmarket:

Rule 1: “the stockmarket is not the economy”.

Rule 2: “the stockmarket is not the economy”.

And “yes” you’ve guessed it…

Rule 3: “the stockmarket is not the economy”.

Aligning the current state of the economy to the value of your portfolio just does not compute – it never has. The majority of you do not like too much excitement, which means that you invest in the IronBright 50 portfolio or in lower risk-rated ones, such as the IronBright 30 portfolio (we go up in factors of 10 to the IronBright 100 portfolio, which is entirely equity based and is a little bit racy).

The performance figures year to date are interesting because if you looked at them, you would never guess there is a global pandemic and an economic meltdown (figures since the beginning of 2020) although I grant you the FTSE still looks a little poorly:

MSCI World Index* +5.31%
IronBright 30 P -0.57%
IronBright 50 P -3.77%
FTSE All Share -20.65%

(*MSCI World Index is an index designed to track broad global equity-market performance. It is comprised of about 3000 companies from 23 developed countries and 26 emerging markets).

IronBright applies an investment strategy that includes very strict disciplines when it comes to international diversification, employing and accessing a number of fund managers, asset classes and currencies that control overall risk, and it won’t surprise you that we always remain optimistic about the future returns from the market.

We don’t gloss over the world’s problems and we are regularly reminded that the important things in life remain the health and happiness of our family and friends; money remains secondary to this but I hope that you feel reassured that IronBright continues to successfully look after your financial affairs so you free to focus on what is most important to you.


(Apologies that Lockdown Diaries has not been published for the past 2 weeks. We have experienced technical problems, which have now been resolved).

Steve Brady
Director
Steve Brady