Keep calm and carry on. The wartime slogan emblazoned on T-shirts and mugs at the height of the global financial crisis has taken on a new relevance in the second lockdown.
Financial experts emphasise the challenges facing the UK economy, including Brexit.
The outcome of the US election now seems clear, igniting optimism in Wall Street. But the chaos surrounding the process and the threats of legal action are still reasons to feel apprehensive.
Opportunity knocks? With markets plunging into an extended period of uncertainty, investors should aim to preserve capital, while seizing opportunities that even now are being created
Yet shunning stock markets may not be the best response to the prevailing uncertainty, even though so many investors have chosen to do so since the March slump.
The amount stashed in cash savings accounts has swelled by £88billion since then, even as negative interest rates approach. Your aim should be to preserve capital, while seizing the opportunities that even now are being created.
An investment trust like Ruffer which holds a blend of bonds, gold bullion and shares could be your buffer and comfort blanket, while you back fast-growing trends like the accelerating shift to online, and the increased future use of technologies in healthcare.
David Coombs of Rathbones, the wealth manager, says: ‘The strong, that is, companies like Amazon, will get stronger. They are going to get through this, while the weak get weaker.’
Amazon shares stand over $3,300, disproving the sceptics’ view that this arch disrupter was overvalued even at its March low of $1,626.
Coombs adds that, in response to the pandemic, governments will be striving to change way they spend money on some aspects of healthcare, freeing up highly-skilled clinicians to concentrate on serious conditions.
The beneficiaries would include American testing companies like Abbott Laboratories, Eurofins Scientific and Thermo Fisher Scientific whose products include Covid test kits.
UK-listed Smith & Nephew, best known for hip replacements, and its US rival in this field Stryker, are also well-placed to make the most of the faster adoption of technology.
The conviction that the pandemic may have permanently changed behaviour and policy raises questions over shares that may seem to be opportunities at their current valuations.
At the start of the year, the share price of IAG, owner of British Airways, was 256p. It is now 103.6p.
Karl Craig of wealth manager Canaccord Genuity sees little prospect for a bounce back any time soon: ‘Companies aren’t going to want to spend money on business class fares for their executives to go to New York, when so much can now be done virtually.’
Coombs points out that even if lucrative transatlantic travel resumes, some airlines in other countries could be state-owned, making it difficult for BA to compete on fares. Over the past 12 months, the FTSE 100 has tumbled by 21 per cent.
The index’s lack of popularity has unfairly blighted some of its household name constituents which are ‘great businesses’ in Craig’s opinion.
Shares in Unilever, for example, are lower than a year ago, although the use of some of its array of products like Dove soap has soared during that time.
Diageo, the drinks group, is down from 3500p to 2642p since January, despite the consolation that many will be finding in a tipple.
Reckitt Benckiser, which makes Dettol and Cillit Bang, cleaning brands on which we have placed our faith in past months, has fared somewhat better.
But the analytics business RELX has been a casualty because of the impact of coronavirus on its exhibitions division. Craig points out, however, that there are signs of life in this activity in Asia where recovery from the pandemic is quickening.
If any of these opportunities seem potentially golden to you, you may be wondering when to buy. But waiting for exactly the right moment is, in the words of one professional, the route to madness.
One way to invest now in a mix of consumer goods, healthcare and tech companies is through the TB Evenlode Global Income funds, an AJ Bell recommendation for those happy to take some risks in these perplexing and anxious times.
A less adventurous route would be the Personal Assets trust which holds stakes in Google-owner Alphabet, Diageo and Medtronic, another US healthcare firm whose ventilators, oximeters and oxygenation machines are being used in the fight against Covid. Cash, gold and US Treasury bonds make up about 57 per cent of the portfolio.
Ruffer, mentioned earlier, is a similarly safety-first trust, designed for the return of capital, rather than thrills and spills, but with one small difference.
It holds Walt Disney whose Disney+ streaming division has been its only saving grace lately.
I also have some of these shares and am gratified to learn that even a defensive fund believes that the future holds opportunities for fun.
Popular Shares – B&M Retail
B&M Retail has been a winner in the pandemic as its ‘essential’ DIY, garden, pet and grocery products allowed it to stay open during lockdowns.
The Liverpool-based retailer has planted itself firmly in the FTSE 100 in 2020.
Barclays analysts said: ‘If one was constructing a retailer from scratch at a time of pressure on disposable incomes and concerns about crowded spaces, then B&M would tick numerous boxes.’
But, as it announces its half-year results on Thursday, the City has questioned whether its stock can continue the meteoric rise – which has already seen shares double in value since March.
With a market capitalisation of £5.2billion, B&M is more valuable than Britain’s second biggest supermarket Sainsbury’s, and 2.7 times the size of Marks & Spencer.
The key benchmark for the first half will be its earnings estimate of £285million – almost 90 per cent more than last year.
The company has already announced like-for-like sales growth in its UK stores of 19.1 per cent in the three months to the end of September.
Investors will also look for early signs that pandemic shopping habits are becoming permanent or that consumers are becoming more price conscious.