6
Your Investment Update – Q1 2021
Strategy You don't have to be an optimist to buy equities Life is full of simplifying analogies. You might look for a needle in a haystack, think about life as being like a box of chocolates or work out how useless it is to rearrange deckchairs on a sinking ship. The financial industry has its analogies too. The stock market is like a rollercoaster because black swans appear from time to time and derail an economy. Apparently. Good analogies can create easyto-understand images, help compare and contrast different situations – and even inspire people to action. The COVID recession needed simplifying If there was ever a time the world needed simplifying analogies, 2020 was it. For starters, the only comparison we had to this situation was the Spanish flu of 1918 – and today’s investors weren’t around then.
Events in 2020 were hard to comprehend. China saw fit to shut down and seal off a city of 11 million people. And the virus was so severe that they went on to build a brand new hospital within six days! That scale of response is usually reserved for Matt Damon movies. The bad health news spread across the world. Hospitals ran out of space, medical equipment was in short supply and mortality rates tragically surged in some places. Economies suffered the consequences. Everywhere you looked the economic news was off the scale. Oil prices went negative (huh?), nearly 20 million Americans lost their jobs in just two months and the global airline industry ground to a halt (not an analogy this time).
