Terry Smith on Market Timing and PI World Presentation by David Thornton

David Thornton, who is the Editor of Growth Company Investor, did an interesting presentation for PI World this week. He made an interesting observation in that he likes to avoid stocks that are both highly valued and lowly valued, i.e. on high or low P/Es. This is very wise. The high P/Es are typically discounting a lot of future growth and show the enthusiasm by investors for the business. In reality the high valuation may be a mirage and is being driven by share price momentum and the keenness by retail investors to get on the bandwagon for small cap shares. At the other extreme, they may be lowly valued because the business has some fundamental weaknesses or big strategic problems. Growth at a Reasonable Price (GARP) may be a better investment strategy for overall long-term performance.

See https://www.piworld.co.uk/2020/07/03/piworld-webinar-david-thornton-small-is-beautiful-why-small-caps-what-to-buy-now/

Terry Smith of Fundsmith has written an interesting article on market timing for the Financial Times. He is very opposed to trying to time the market and suggests that taking your money out of the market, as many people did in March, was a bad mistake. He equates it to driving while only looking in the rear-view mirror.

For an institutional fund manager, who cannot move large positions easily, that may be wise. It has certainly worked out well for the Fundsmith Equity Fund which has bounced back, and more, from its low in March.

But I am not totally convinced that it is wise for all investors. Markets do not always recover rapidly as they have done from the Covid-19 epidemic – at least so far although that story may not yet be ended. In the case of the Wall Street crash of 1929 it took 25 years to fully recover. So taking money out of the market early on might have been very wise.

Hedging your bets by taking some money off the table and hence managing your risk exposure is surely a sensible thing to do when the market is heading down. There are three things to bear in mind though:

  1. Small cap shares such as those on AIM can be very illiquid and hence a few sellers can drive the shares well below fundamental value. These are not the kinds of shares to dump in a market sell off unless they are directly impacted by the negative news (e.g. by the virus epidemic closing their businesses and they are at risk of going bust).

 

  1. You also need to be wary about Investment trusts. These again are often not actively traded so they can suffer not just from declining share prices in their portfolio holdings but from widening share price discounts. When the discounts get very wide, it is time to buy not sell.

 

  1. If you have moved into cash, it is very important to know when to buy back into the market. You need to keep a close eye on the direction of the market because bounces from market lows after a crash can be very rapid. Many retail investors sell at the first hint of a crash, but miss out on the recovery which is very damaging to overall portfolio performance. They miss out because they are demoralised and have lost faith in stock market investment. You do need to take a view though on whether a bounce is just emotional reaction to the realisation that the world may get back to normal, and how the recovery may affect individual stocks. In other words, you may want to move your cash back into different holdings.

As a holder of the Fundsmith Equity Fund, I would not normally argue with his investment wisdom but he may be in a different position to many retail investors. I did take some cash out of the market after the peak bull hysteria of late 2019 and in March after it was clear some companies would be badly hit by the epidemic. This provided some funds for picking up other depressed companies. But Fundsmith was not one I dumped.

The Terry Smith article is here: https://www.fundsmith.co.uk/news/article/2020/07/02/financial-times—there-are-only-two-types-of-investors

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Coronavirus Impacts – Victoria, Auto Trader and Bowling Alleys

Stock market investors are clearly becoming nervous again following a rise in Covid-19 infections in the UKA – particularly in the Southern and Western states. This has affected the US stock markets and, as usual, it has affected UK markets in sympathy.

There were two announcements this morning that were interesting as regards the impact of the virus epidemic and the resulting “lockdown” of the population. Home working has become more normal or people have been “furloughed” or permanently laid off.

Victoria (VCP), a manufacturer of floor coverings, had to close their factories but they have all now reopened. Their customers are mostly retailers and many of them had to close but are now reopening or already have done. The company says group revenues for the last three weeks are now at 85% of pre-Covid-19 budgets.

Interestingly they say this in today’s trading update: “It is important to remember that 93% of Victoria’s revenues are derived from consumers redecorating their homes, not construction or commercial projects, and consumer demand for home decorating products appears to be strong across the world. This is not altogether surprising, given the extended period consumers have spent in their home over the last four months, which is likely to have encouraged the impulse to redecorate”. Clearly it’s time to do some DIY jobs.

Auto Trader Group (AUTO) announced their final results for the year ending March 2020, which contained an update on current trading. They provide a web portal for car dealers, who all had to close. Auto Trader provided free advertising in April and May plus a 25% discount in June. As a result they lost money in those months. The company has also chopped the dividend, cancelled further share buy-banks, did an equity placing and used the Government’s Job Retention Scheme. A vigorous response in essence, rather like that of property portal Rightmove.

Car dealers are reopening but for most you cannot just walk in to the dealer. You have to make an appointment. This encourages web shopping for a new car which is to the advantage of Auto Trader. The company announcement (and what was said in their web cast which was otherwise somewhat boring as it consisted mainly of reading a script), was generally positive but it leaves a question as to how soon car sales will recover. They don’t seem to be losing many dealers and dealer stock figures are what matter rather than sales. But dealers’ revenue and profits might come under pressure as many car purchases can be postponed. Cars do wear out of course, but with mileage reduced as there were, or are, few places open to go to and more home working is taking place, this could reduce car sales.

This is therefore a company where one needs to look to the future and how they can capitalise on the trend to shop for cars on the internet, like one might shop for groceries or clothes of late. One competitor mentioned in the conference call was Cazoo who sell (or lease) cars directly on the internet. No test drives or inspection first. You just get 7 days to trial it before acceptance. This is clearly a different business model that might affect traditional dealers although they also provide service of course and concentrate on new cars which is a more complex sales process. There may also be an issue of trust when using an on-line service. But the process of buying and selling cars certainly needs simplifying from my last experience of doing so.

At least bars and restaurants can reopen, albeit with severe restrictions on social distancing. That will certainly reduce their sales volumes and increase their costs, resulting in a big hit to profits. Still a sector to avoid I think.

Bowling alleys were expecting to be able to open from the 4th July based on what Ten Entertainment (TEG) and Hollywood Bowl (BOWL) said. But the recent Government announcement has put a stop to that along with the reopening of gyms and swimming pools. They now hope to reopen in August.

Is this ban rational? I can see why indoor gyms might need to remain closed. A lot of heavy breathing and sweating in close proximity. But bowlers don’t exert themselves much from my experience and if alternate lanes were used social separation would be good so long as they used their own shoes.

Note that I hold shares in some of the above companies. But thankfully not in Wirecard which I previously commented upon and which is now filing for bankruptcy proceedings.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Why Do People Queue, and Retail Renaissance?

This blog post was prompted by pictures of people shopping on Oxford Street last night and a tweet from Emilios Shavila showing a queue for Primark at my local shopping centre in Bromley – it looks to be at least 100 yards long. Why does anyone queue to buy non-essential items? Have they not discovered internet shopping?

This is very puzzling as personally I can’t stand to queue for anything and I don’t think I have been in a shop for over 3 months, and very rarely also in the last year. Do people like the social interaction of shopping? Or is it because they can take a friend along and ask them “do I look good in this?”. Perhaps retail shops are not quite heading for extinction just yet, but I certainly would not be investing in them at present unless they had a very strong on-line business element. I feel that shopping habits really are changing and the epidemic has  hastened the move to on-line retail therapy.

The good news is that US retail sales bounced upwards by 18% in May which is a record since 1992 according to the FT and confounded forecasts of a rise of only 8%. That followed a decline of 15% in April. Will the UK follow a similar pattern? Let us hope so because retail spending can have a big impact on the overall economy.

One company that might be affected by High Street footfall is Greggs (GRG) who gave an update on their plans for outlet reopening this morning. Many of their shops are still on High Streets although they have been diversifying into other locations such as motorway service stations and train stations. Greggs has over 2,000 shops altogether and plan to reopen 800 on the 18th June. The rest will reopen in July.

The share price has jumped by 7% at the time of writing, but they do say that they “anticipate that sales may be lower than normal for some time”. Shore Capital reiterated its “Sell” rating on the share because they consider the High Street will take time to adjust to life in a post-coronavirus environment”. They also consider that Greggs will incur significant extra costs as a result of the measures they need to take.

My view (as a shareholder in Greggs) is that I still find it impossible to judge the likely profits (or losses) at Greggs in the short term despite quite a lot of detail in today’s announcement. It’s really a bet at present whether you see it as a valuable property in the long term or not while ignoring the short-term pain. That’s not the kind of investment bet I like to take so I will simply wait until the picture becomes clearer. Regrettably the same logic applies to many other companies at present.

On a personal note, one organisation that has solved the queuing problem is the NHS. Apart from converting my hospital appointments to telephone consultations, the latest manifestation was a new “drive-thru” blood testing service. You get a timed appointment so I drove up on the dot and immediately had it taken through the car window. No need to even get out of the vehicle. Absolutely brilliant. But I am not sure that will be quite so practical in mid-winter.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Business Trends, Speedy Hire and the Hospitality Sector

After my negative comments in a previous blog post on Friday about the short term prospects for share prices bearing in mind all the uncertainties that face us, there were several other commentators over the weekend who suggested the market was ignoring the realities. Too much exuberance in expectation of a quick recovery was a common theme. That may be why the market opened in a sluggish manner this morning when Monday morning is often a time when share prices rise after investors read share tips over the weekend.

What is really happening in the real economy is the key question? Just walking around the streets near my home it is clear that builders and home improvers have got back to work. This is also apparent in the trading statement issued by tool/equipment hire company Speedy Hire (SDY) this morning, in which I hold a few shares. Their revenue is only 17% down on the prior year for the last week, whereas it was down 35% in April. With aggressive cost cutting measures already taken, the “Board remains confident that the Group can operate within its existing debt facilities and covenant tests during a prolonged period of reduced trading activity”.

However the bad news is that the accounts have been delayed and they are investigating a claim against a subsidiary named Geason acquired in 2018. They are also writing off the carrying value of goodwill and the contingent consideration payable on that acquisition. It only represents c.2% of group revenues but they say it has not performed in line with management’s expectations. It looks like an acquisition that was unwise. It is probably no coincidence that the finance director is soon departing.

One indicator of investor confidence is of course the state of the housing market. When house prices are rising, investors feel wealthier, and when they are falling, confidence is undermined. Knight Frank reported a 2.1% decline in central London property prices in April and Nationwide reported a national 1.7% fall in May. That is not surprising though bearing in mind that the Covid-19 epidemic may have discouraged house purchases given the economic uncertainty and job losses. Will people really be buying houses when they have just been “furloughed”? In addition, estate agents have been closed and house buyers deterred from visiting properties by isolation restrictions. But in the real world, this may be rapidly changing. A neighbour of mine in our outer London suburb decided to sell her house recently. In just a few days she had a number of inquiries and there were several offers received in no time at all. She did lower the price somewhat as against what I would have asked, to achieve a quick sale no doubt, but it is clear the market is alive and well.

Retailers are getting back in operation – there have even been two new shops opened recently in our local High Street. But the travel and hospitality sector firms are furious about the new quarantine rules for visitors coming into the UK. They claim, perhaps rightly, that it will kill their businesses and they would have to cease trading. A group called “Quash Quarantine” claims the quarantine rules are unjustified and not based on any science, i.e. they are disproportionate. A “letter before action” has apparently already been submitted to the Government. Comment: This looks like shutting the stable door after the horse has bolted as checking incoming visitors and enforcing quarantine might have had some effect in the early stages of the epidemic in the UK but it will now have minimal impact. It surely makes sense to have some targeted restrictions (e.g. visitors from known “hot-spots”) and more checks/testing of visitors in general but a blanket set of rules with little chance of 100% enforcement seems very unreasonable. Otherwise the tourism industry will be destroyed at enormous financial cost, and the whole hospitality sector damaged.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Market Trends, Big Miners and Will the Music Stop?

Stock markets continue to rise. They seem to be ignoring the bad company results that are going to come out in the next few months. Although there are signs that the Covid-19 epidemic is weakening, some sectors such as hospitality are going to be in lock-down for some time. The economy is clearly going into recession with many employees being laid off. The lack of consumer spending, not just because some people have less money to spend, but because others are growing more nervous of spending money or finding fewer things to spend it on, is going to have a wide impact on the economy.

Cash is being put back into the stock market, simply because with very low interest rates there seem to be few good alternatives. The measures taken by central governments to refloat the economy will promote asset inflation so these trends may continue.

Investment trusts I hold which are popular with private investors seem to be some gainers from this market enthusiasm with their discounts narrowing again. Small cap stocks are also recovering and with very low liquidity just a few trades can raise their prices dramatically for no good reason. Or sharply reverse when a few sellers think the prices have risen too far. Rational judgement on share prices flies out the window when share prices are being driven primarily by momentum.

My portfolio continues to follow the market trend as it is very diversified even though I don’t hold shares in the sectors worse hit by the epidemic. I may have to put cash back into my ISAs which I withdrew only in March after making some sales. I have been buying a few large cap stocks which is not usual for me. I tend to avoid FTSE-100 companies as their share prices are driven by professional analysts’ comments, by geo-political concerns, by general economic trends and by commodity prices. You can buy a FTSE-100 company and soon find it’s going downhill because one influential analyst has decided its prospects are not as they previously thought.

But I did start buying a couple of big miners, BHP and Rio Tinto, in March which has worked out well. I considered the fundamentals sound and China, which is their major market, was clearly recovering and getting back to work rapidly. There was an interesting article in the Financial Times a couple of days ago highlighting other reasons why they are doing well. It was headlined “Australia’s iron ore miners exploit supply gap as Covid-19 hobbles rivals”. It explained how BHP, Rio Tinto and Fortescue Metals Group were capitalising on the production problems of their competitors in Brazil and South Africa who have been badly hit by the epidemic, while demand has remained buoyant. In Australia, where most of the mining is in Western Australia, they took vigorous action to halt the virus early on and most of the workers fly in and out so are easy to monitor. It seems that this unexpected turn of events has helped rather than hindered my investment performance for a change.

Although I am confident that the economy will recover in due course, and stock markets will follow that trend as they always must do, in the short term I find it difficult to be positive. It is hard to identify companies where one is both confident that they won’t be badly affected by the epidemic in the short term and where one can reasonably accurately forecast their future earnings. It’s the opposite of shooting fish in a barrel to use a bad metaphor. Together with the uncertainty of whether we will get a second virus wave, whether a working vaccine will be found, the impact of Brexit and the prospect of higher taxes, mine and the confidence of other investors must surely be low. In the short term, growth in company profits is going to be hard to come by, which is often the major driver for improving share prices.

But the market is ignoring that. It reminds me of the infamous saying of Citigroup CEO Chuck Prince during the last big financial crisis – “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance.”

Unfortunately judging when to move in and out of markets is not a skill that most investors have and so I will stick to trend following while keeping a sharp eye on events.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Scottish Mortgage Investment Policy and LSE RNS Announcements

The Scottish Mortgage Investment Trust (SMT) have issued their Annual Report and AGM Notice. Readers who hold this trust will not need reminding that it has shown a remarkable performance over the last few months. That’s when the stock market has been decimated by the Covid-19 epidemic and the share prices of many other similar trusts and of the companies they hold have fallen sharply.

Last year SMT achieved a total share price return of 12.7% to the end of March and in the current year it achieved a share price increase of 23% to the 12th May. How has it achieved this return? Primarily by holding “hot” stocks like Tesla, Amazon.com, Illumina, Tencent and Alibaba to name the top five holdings. Over a third of the current holdings are unlisted ones. They claim the flexibility to invest in such companies “has been an important driver of returns over the last decade”. I do not dispute that but they are now proposing to change the “investment policy” of the company to raise the maximum amount that can be invested in such companies from 25% to 30%, based on the proportions when invested (that is why they have managed to already exceed that figure).

Is this a good idea? Should investors support it? Bearing in mind the travails of Neil Woodford where the funds he managed had large numbers of unlisted holdings, is it wise one has to ask?

Personally, I do not think it is and will be voting against. I am not suggesting that Baillie Gifford, nor the individual fund managers they employ, will make the same mistakes as Woodford. Just that valuing unlisted companies is a different matter to that of listed companies where there is always a market price. In addition unlisted holding are very illiquid in nature. Disposing of them can be very difficult. Private equity investment trusts often trade at a considerable discount to their net asset values for those reasons, while SMT currently trades at a premium of 2%.

Retaining the existing limit would prevent more unlisted investments being made, unless some of the unlisted holdings are disposed of, but that may be no bad thing given the current market enthusiasm for them.

I also note that Prof. John Kay is retiring from the board after serving since 2008. Much as I admire the wisdom of Prof Kay, I welcome this change. I hate to see directors of trusts serving more than 9 years and ignoring the UK Corporate Governance Code, as they so often do.

LSE RNS Announcements. I use the London Stock Exchanges free service to deliver RNS announcements via email. This morning it suddenly changed to a new format without prior notice. The first such notice I received was not in the best format in several ways. Wasted space in a right-hand margin, and no way to print just the announcement text and not the excess.

The second announcement I received just led me into an incomprehensible dialogue. I have sent them a couple of complaints.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Does Stock Trading Need New Rules?

There is a very good opinion piece in the Financial Times today from short-seller Marc Cohodes. It suggests that the fairness of capital markets is under threat in the new digital age and opens with this paragraph: “We live in an era where some stock promoters and short sellers open large positions prior to publishing market-moving information about a company, and rapidly close those positions after inducing a buying or selling frenzy”.

The author suggests that there should be a rule requiring a ten-day minimum holding period for any stock promoter or short seller who opens a large position and disseminates market moving information. That would give markets the time to evaluate the claims made while if the espoused views turn out to be true the publisher could still make profits. That seems an eminently sensible suggestion to me.

See https://www.ft.com/content/01b765c2-854e-11ea-b6e9-a94cffd1d9bf for the full article which is well worth reading.

What might be the objections to this proposal?

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Bad News Rises as Market Does Also

Stock markets continue to rise when the economic news is generally bad. Is the market rise based on relief that it does not look like all our shares our going to become worthless, or relief that we have not yet caught the coronavirus personally? Although I know a few people who have – thankfully all recovering.

But companies continue to issue announcements of the kind that say “too early to tell the full impact” while reporting negative sales trends in the short term. Meanwhile the Bank of England is going to simply print money to finance government spending rather than raising debt in the gilt markets. If that is not a negative sign, I do not know what is.

A couple of companies are worth mentioning: 1) Speedy Hire (SDY), a company who rent out tools and equipment and hence are a good bellwether for the construction and maintenance sectors. They report “reduced activity levels” but they have “retained a substantial proportion of its revenues”. They are cutting costs, it is uncertain whether it will pay a final dividend in August and it “suspends all guidance until the position stabilises”. That does not sound very positive does it?

2) Diageo (DGE) also gave a trading update today. They give very little in the way of specifics about actual sales. They are reducing costs and are still paying the interim dividend this month, but have stopped the share buy-back programme. More information would have been helpful.

Those investors who rely on dividend income are being hard hit as many companies are cutting them out so as to protect their balance sheets due to the uncertainty of the economic impacts of the epidemic. Some of the big insurers are the latest to stop paying dividends and this has a very negative impact on their share prices as institutional investors who run income funds dump them for other shares. Private investors are probably doing the same.

But the really bad news yesterday, although not totally unexpected, was from NMC Health (NMC) who announced they expected to go into administration. The likely outcome for ordinary shareholders is zero. In normal times this would have been a headline story but almost all news is now being swamped by coronavirus stories.

NMC was valued at £2 billion when the shares were suspended but were worth four times that in 2018. So this will be one of the biggest stock market wipe outs in history, probably arising from some kind of financial fraud. I hope those responsible do not escape justice.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Stock Market Bottom and IC Share Tips?

This morning (6/4/2020) the stock market bounced upwards on faint indications that the virus epidemic might be slowing. Have we reached the bottom yet? I am not so sure. A lot of companies in the worst hit sectors are closed for business and running out of cash. They are likely to remain closed for a long and unpredictable time.

We have also not yet seen in financial results news the impact of the virus on the general economy, other than the sectors more specifically hit. But with so many people now out of work there will be a significant impact in due course on companies higher up the supply chain, i.e. the businesses that actually produce goods and distribute them.

I certainly won’t be buying many shares until a clear upward trend is apparent and where the financial results of a company are clearer.

There were a couple of companies which were tipped in this week’s Investors Chronicle as “BUYS” which are worth commenting upon. Diageo (DGE) the drinks company was one. I don’t currently hold it but did so until a few months back. The current share price is now significantly lower.

It’s interesting to look back at the forecast p/e and yield when I purchased an initial holding in November 2018. I always keep a sheet, printed out from Stockopedia, when I first take a stake so that I can look back at my good or bad decisions. The p/e was 22 and the dividend yield was 2.4%.  It’s now on a forecast p/e of 20 and a yield of 2.8%. It’s not really become much cheaper.

Analyst’s profit forecasts have come down but not by much. The company did give a Trading Update on the 26th February. It said this: “Public health measures across impacted countries in Asia Pacific, principally in China, have resulted in: restrictions on public gatherings, the postponement of events and the closure of many hospitality and retail outlets”. It hardly mentioned the impact on the rest of the world probably because on that date the epidemic was mainly concentrated in China.

We really do need more information on the sales status in Europe, the USA and South America to have any idea on the likely impact on profits for the current year. The Investors Chronicle gives positive comments about the company’s “brand power” and “global reach” but I will be restraining myself from jumping into another holding before the picture is a lot clearer. The same applies to many other companies.

Another share that IC tipped was Polar Capital Technology Trust (PCT) which I currently hold. The article included some interesting comments from fund manager Ben Rogoff. He said “We are focused on maintaining a portfolio of high-quality growth companies with secular tailwinds, and have a strong bias to those with clean balance sheets in areas we believe will be less impacted by an economic downturn and are likely to emerge stronger once this challenging period has passed. Companies with high levels of recurring revenue and strong balance sheets should be able to withstand a couple of very challenging quarters”.

He also said “We have rotated away from most cyclical areas, including travel, payments, small business and advertising, industrial/auto and associated robotics, and semiconductor stocks”.

These seem eminently sensible comments. The company’s share price has recovered from a dip in mid-March when both private investors and institutions were dumping stocks regardless and moving into cash. But after the share price bounce this morning, PCT shares appear to be at a premium to the Net Asset Value. In other words, it’s not cheap either. So another share not to rush into buying I suggest until it becomes clearer what the impact on the companies it holds in the portfolio will be. If there is a general economic recession in major countries there will be nowhere to hide.

DGE and PCT may both be quality operations but they are not great bargains I suggest at present. The only companies whose share prices have fallen a long way are those where their businesses are either closed or may be suffering in a big way. Until we have a clearer picture of the impact on the general economy, these are not ones to buy either I suggest.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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Bad News for the Housing Market and On-Line Retailers

The news in the housing sector is all bad. Banks have stopped providing mortgages and builders have stopped building houses (Redrow announced it was closing all its sites this morning). Estate agents are also giving up as nobody wants to have strangers wandering around their house and there are few new buyers. Who would look to buy a house given the economic uncertainty and with everyone’s jobs under threat? Rightmove previously announced it was discounting all its bills to agents but they have now announced that the proposed final share dividend is being cancelled.

Did you think on-line retailers might be able to continue operating? Think again. Next has announced it is temporarily closing its on-line operations including warehousing and distribution. Apparently “colleagues” feel they need to be at home. This mirrors what I have seen from a couple of smaller on-line clothing suppliers I use. They both announced closure in the last few days. Will Boohoo, ASOS and Amazon be able to continue to operate? Only supermarkets seem reasonably sure to be able to stay in business over the next few weeks.

This gloom over the country’s business status was echoed in the comments of Paul Scott on Stockopedia. He said this morning: “Hundreds of £billions in economic activity is being killed off, with ruinously expensive compensation schemes being dreamed up. For what benefit? We’re likely to end up with millions of unemployed, many thousands of destroyed businesses, all of which might have slowed down the spread of the virus a little”. He has lost confidence in the recent stock market bounce and thinks losses will be ruinously high in many companies. I agree with his comments. Certainly in many sectors it’s a question of which companies will survive the year, not whether they will make any profits or pay any dividends.

The only positive glimmer is that Anthony Bolton, who ran Fidelity’s Special Situations fund until 2007 very successfully, is apparently moving back into the market to purchase selected stocks according to an article in the Financial Times. He says “at these prices there are really interesting opportunities”. Certainly the key is to be very selective even if you believe the crisis will be over by the end of the year.

Meanwhile I am sat in the bomb shelter otherwise known as isolating at home. These are such momentous times that I decided to start writing a diary just as my father did during the second world war. It may interest my offspring in due course as reading my father’s diary did after it came to light 37 years after he died. My diary may be a much shorter one though if I catch the virus.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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