We hope that you and your loved ones have remained safe and well during this very difficult time.
A lot has already changed since the start of this outbreak, although we at HFP have tried to remain positive throughout. We are starting to see greater movement around the UK, more people returning to work, the ability to meet up with a larger number of friends and family, and the gradual reopening of businesses and shops. And the sun is shining!!
We understand that there are still some issues ahead and ‘social distancing’ is likely to remain the norm for some time, although the indications from other countries is that a ‘second wave’ seems highly unlikely. The number of individuals being diagnosed will obviously rise and fall, but this does not constitute the same as returning to the initial intense wave of infections.
At HFP we have largely managed to continue as normal during these times and both offices have been visited every day to collect and distribute incoming post, although most of our colleagues have been working remotely. We have not needed to furlough any colleagues and we do not intend doing so in the future.
We will obviously respect and continue to work within the guidelines laid down by the Government, and in view of the likely timescales we are currently making all the necessary arrangements to ensure safe working conditions for when we gradually reintroduce our colleagues back to our Hingham and Norwich offices.
Clearly and regrettably it is likely to be some time yet before we return to a completely normal working relationship and be able to enjoy face to face client meetings again as we would prefer, but we will keep you advised about this.
We accept that many companies will have to change processes and there will be a new ‘normal’, but we also recognise that a number of these changes could be for the better. For HFP one major change we have already seen is arranging more regular Investment Committee Meetings. These are usually conducted on a six-monthly basis as part of our centralised investment process and between these meetings we would have an interim telephone conference. Since March these have been at least fortnightly to be able to keep abreast of developments and how these will affect the markets in general. Naturally, these meetings have been virtual and using the technology available!
This increased activity has allowed us to be confident in continuing to deliver our message to all our clients from the beginning of the crisis which is to continue to remain invested. We fully understand that emotion plays a large part when markets are falling but we maintain that investing is a long-term commitment and that short-term volatility has always been a characteristic of this, but over the long term the trend is a rising one. Our advice to remain invested where possible has thankfully proved to be the right advice up to this point.
At close of play on Monday 1 June 2020 the FTSE100 stood at 6,166 and at its lowest point during the current crisis, 23 March 2020, the FTSE100 had fallen to 4,993. As more information became available and measures were put in place global stock markets have continued to stabilise and recover. Part of this was because individual Governments and Central Banks announced unprecedented levels of monetary and fiscal stimulus to counteract the impact of ‘lockdowns’ with the US Federal Reserve and Bank of England both cut interest rates to new record lows. Confidence also plays a large part in any recovery.
Values do move very quickly. Many clients will now be receiving quarterly statements and these latest reports show values of holdings at the end of the tax year on 5th April. At this point the FTSE 100 had already risen to 5,582 from its low a few weeks before and the recovery has continued since this point.
Despite these continued gains and more optimism, there remains a great deal of media speculation regarding a ‘recession’ and whilst we completely accept that a global recession is now inevitable, it is important to understand what this means. There are several definitions but in broad terms a recession is a period of temporary economic decline during which trade and industrial activity are reduced. It had been typically recognised as two consecutive quarters of economic decline with other indicators such as a rise in unemployment.
We have always recognised that unfortunately unemployment will have been high and economic output will have been suppressed during these first two quarters, but the markets have also factored this in as we have eluded to before. When poorer than expected economic data from the UK and US was announced recently, the markets only reacted very slightly which would seem to support this position that they were not particularly shocked and are forward looking.
The ‘Great Depression’ of 1929 and the ‘Credit Crunch’ of 2008 (which have drawn comparisons in certain quarters) can both be attributed to being as a result of an underlying financial crisis which take longer to recover because of the inability of businesses to raise capital. The issues we have seen with this recession are not the same as they were effectively linked directly to the Coronavirus pandemic and as such you will have noted that the recovery of global stock markets has already been quicker.
We do recognise that there is a long way to go for both the economy and individuals, but we hope you are able to share with us the optimism of the immediate future when we consider the events of the past three months. Hopefully this has given many of us an opportunity to reset and we can look back on this as a time when we all took stock of what is precious to us, as well as being thankful for video conferencing, online games, jigsaws and walks!
We remain committed at HFP to getting through this difficult time and although our service to you may have looked different, please rest reassured that we have been monitoring the situation and investments closely and we are here if you would like to speak to us regarding any aspect of your financial planning, or for a catch up.
Stay safe and well and we hope to speak to you soon.
Robyn Lovatt FPFS, Cert CBD
Neil Warne Dip PFS
