I am sure you shared our sadness when we heard the news that Captain Tom had died at the age of 100 – (a pity he could not have made it to 101), but what a fantastic last few months he managed to achieve.
This time last year, the vast majority of us had not heard of him and yet today, he has global fame and is a household name to many. What irony that he should contract the coronavirus whilst he was in hospital being treated for pneumonia.
Not only did he raise a huge sum for the NHS, over £32M, but we have no idea how much additional fund raising was achieved by those he inspired. It was really good to see that he thoroughly enjoyed his fame and experiences and why not? So let me close by reminding us of his optimistic approach and to quote him “Tomorrow will be a good day.”
Our thoughts are with his family.
When Donald Trump left office, you might have thought we had seen the last of social media’s influence on financial markets and then last week, we had the GameStop story hit the headlines! This is where through social media, GameStop, which is an American video game retailer, found itself to be the target of would be private investors which saw the value of their shares increase more than 10 fold in just a few days. Great news for anyone who invested and then bailed out early, but what is the story really all about.
You could say that it was “the little man” fighting back against the Hedge Fund world and in particular, funds that were “shorting” GameStop shares. Shorting, is where a Fund Manager is taking a bet on the value of a share and specifically that it will be going down in value. In basic terms, they will agree to sell shares that they don’t yet own at a market price today, and the transaction will be due to complete on a given date. The hope is that the value of the shares will fall, such that they can be purchased at a price which is lower than the amount they have already agreed to sell for, which will net a nice profit for the Fund Manager.
This is something which is common practice in some parts of the investment world and is one way that funds can turn a profit, even in a falling market. The result of GameStop increasing in value so much and so quickly, wrong footed the Fund Managers that were “shorting the stock” who reportedly suffered losses of several billion US$. The Fund Managers cried foul but the regulator in the US, the SEC, said fair game!
The social media focus then turned to the silver market but that was rather more short lived. 1 – 0 to the little guy perhaps!
There were also fun and games last week with the EU trying to invoke Article 16 of the post Brexit trade agreement when they were faced with a shortfall of vaccine supplies. Only to complete one of the fastest U-turns seen for a long time. So what was that all about?
Well, it really comes down to politicising the roll out of the vaccines and perhaps some attempt at diverting attention away from the fact that the EU had failed miserably with its vaccine purchasing programme and roll out to the population at large. Not only were they 3 months behind the UK in placing their orders, they were also a month later in completing the regulatory approval process of the Oxford Astra Zeneca vaccine. The production of vaccines were hitting some issues and not without irony, did we learn that it was the facility in Belgium that was the main culprit. The press were quick to savage those responsible and even the German national newspaper De Zeit ran a headline that said this was “The best advert for Brexit” – certainly a bit of an own goal for sure to say the least.
Whatever criticism there may have been about the overall handling of the pandemic by the British Government, I think their vaccination roll out programme has been exceptional and is well on course to achieve the first objective of all over 70’s having been offered a vaccination by February 15th. 10+ Million and counting! We are also seeing some very encouraging statistics in terms of the numbers of infections and hospitalisations coming down, which should in turn be reflected in the mortality numbers. Long may that continue.
In the financial world, you might say that markets have been treading water over recent days. but as we start to see better than expected earnings results being announced and the continuing roll out of the vaccination programme, this will, in due course start to reflect in market values and so I remain positive for the medium and longer term as I have been saying for some time.
By way of further endorsement, this morning, Andrew Bailey, Governor of the Bank of England said he believes the vaccination success is “outstandingly good news” and he is predicting a “pronounced economic recovery” for the UK.
As 2021 slowly unfolds, I think we should therefore be able to start planning ahead more and with that in mind, I will close with a quote from John Lennon who said “Life is what happens when you’re busy making other plans.” So let’s start making some plans!
As always take good care
Richard, Chris and Lesley