Yes, I know we’ve taken a short term hit but I’m still optimistic about stock markets in the longer term. Why do I continue to have faith in the markets? Well, here are 4 good reasons. Firstly, after the initial fall, markets have improved since the beginning of April. Secondly, in the past, markets have recovered from a variety of shocks. Also, some sectors are doing better than others and lastly, a long-term perspective is generally the best to take.
This is very much my view right now. Let me explain more.
1. I’m Optimistic About Stock Markets as They’ve Improved Lately
Take a look at the FTSE100. Between 19th February and 23rd March, the FTSE100 dropped in value by 33%. By 12th May it was up 20% on 23rd March. OK, we’re still not out of the woods but it’s worth noting that we’re now going in the right direction.
2. In the Past, Markets Have Recovered from Shocks
This has been a consistent theme of my blogs. Back in February 2019, I was recommending taking a long-term view of markets. In that article I gave several examples that showed in the past, markets do recover from shocks, such as the dotcom boom/bust, the global financial crisis of 2008.
3. Some Sectors are Doing Better than Others
We work with professional investors. They don’t just look at FTSE100 in total, they look at individual firms and sectors carefully and expertly before making investment decisions. Just looking at sectors will show you that right now travel and leisure are being hard-hit. As are automobiles. Yet food manufacturers, distributors and retailers are doing better. I prefer to trust professionals to select investments rather than relying on short term indicators, like today’s FTSE100 value.
4. Long Term Perspectives are Generally Better
I continue to remain optimistic about stock markets when taking the long term view, I always advocate. It’s difficult during lockdown to think positively about the future, but then it was difficult in all previous downturns, too.
Overall, I am confident and optimistic that stock markets will deliver value in the long run and that professional investors will allow us to outperform the market averages. Stick with it, think of the future.