Week 5 and it is looking like nothing will change until well into May; I am pleased to report that the team at Matthew Douglas Limited remains motivated and committed to serving our clients as best we can in the current environment.
The office premises continue to function with a skeleton staff of myself, my son and trainee adviser Ollie, with additional an essential administrative support from the rest of the Pescott Frost clan in the form of fellow director and my wife Rebecca and my daughter Alice whose college education appears to have come to an abrupt end.
We are all isolating together at home, so it seems appropriate for us to also continue to isolate just down the road in the office.
The rest of the team are working from home and we have all been forced, with varying degrees of enthusiasm, to adopt technology as never before.
Microsoft Teams is the platform of choice for our face to face internal communication providing the same look and uncomfortable feel as yesterday in Parliament but it’s keeping us all connected and the less formal use of Whatapp serves to provide a substitute to the office ‘chat’ that everyone enjoys.
Client meetings continue unabated to ensure everyone is kept properly informed as to how recent market volatility may have impacted individual investments, the preferred platform appears to be Zoom but we are always open to experiment with alternatives or to simply use the telephone.
All these changes are clearly not ideal but I have no doubt it has made all of us rethink how we may be communicating with each other in the future but, as always, those decisions will be down to each client individually.
In terms of the way forward and the company view on how pandemic developments are affecting how we adjust our portfolios for the future I remain confident that the strategies we have in place are sufficiently robust to protect against the worst effects of the stock market drop in March but to provide opportunity for recovery going forward.
I would add however, that rebalances at the point of reviewing existing investments may well be sensible in light of the falls that the more aggressive equity elements of a portfolio may have suffered which may render it overly defensive in an environment when equity markets are historically low.
The past week has seen stock markets unusually calm with no unexpected shocks and no overtly positive news to move the dial on a consensus view that stock markets are trading at appropriately low levels to reflect huge downturns in company activity and profits.
Of course, there will be winners and losers, interestingly one consequence to the collapse in the oil price has seen ESG funds perform well compared to the more mainstream offerings that invariably have far higher exposure to oil companies.
Looking ahead to the rest of this year our view remains unchanged, we are cautiously optimistic that markets will recover sharply as economic activity gradually returns although normal levels of activity are some considerable way off and are unlikely to resume until a vaccine is found and becomes widely available.
There will also be a reckoning to be faced in terms of corporate taxation in the UK and beyond to address the unprecedented high levels of government spending found in all parts of the developed world.
Those economies that demonstrate the fastest adaptability to a changing global business environment will be the ones that thrive; I am confident that the US and the UK have this opportunity although I suspect the damage within the Eurozone may be deeper and more prolonged.
I also think there will inevitably be another debate to be had in relation to the West’s future economic and political relationship with China.
As always, significant change brings significant opportunity, the challenge for UK investors, financial advisers and fund managers is to identify where these opportunities will emerge and to invest in the businesses of the future.
I wish everybody good health, whatever the future brings however uncertain, rest assured that Matthew Douglas Limited remains committed to sharing the journey with you and to providing the advice and the answers to address your financial needs as best we can.
Matthew Pescott Frost