What’s on the stock market horizon?

Hopefully, the worst of the COVID19 pandemic is now over and people around the world can start easing themselves into the new normal.  Of course, in some place, the term “the new normal” may have to be interpreted fairly loosely.  In the UK, for example, 2021 should be the year Brexit really begins as the UK finally severs ties with the EU. 

With all that’s been going on in the world and all that’s yet to come, it seems reasonable to assume that investors will be looking around and asking themselves what’s to come on the stock market horizon.

Figuring out the post-COVID19 landscape

At present, there seem to be two key business-related points to take away from the COVID pandemic.  The first is that businesses need to work out the right balance of real-world activities versus online activities and then once they have figured it out in theory, they need to work out how to make it happen in practice. 

The second is that many businesses will need to think long and hard about how they manage their manufacturing hubs and supply chains.  Breaking away from a dependence on China may be hard and expensive in the short-term but it could prove essential if businesses are to survive over the long-term.

Ultimately, such a move could also prove beneficial for China if it resulted in the country focusing more on developing its own industries rather than having so much of its economy dedicated to supplying industries headquartered elsewhere.

Figuring out the post-Brexit landscape

The post-Brexit landscape isn’t exactly uncharted waters.  The UK existed before the EU.  It is, however, waters which haven’t been charted for quite some time.  To complicate matters, the UK’s relationship with the EU is likely to be influenced by the post-COVID19 situation. 

In other words, both the EU and the UK are going to have to make decisions on how they want (or feel they need) to manage the post-pandemic environment.  Then they’ll need to see how well their respective positions synch with each other and what that means in practical terms for their relationship.

The future relationship between the UK and the EU has the potential to impact a range of industries.  Some, however, stand out as being “in the front line”, these include Agriculture/Fishing, Travel/Haulage/Logistics and Financial Services.

Figuring out the geopolitical landscape across the world

Even if investors only buy shares on the FTSE, they may be buying into global companies and/or global trends.  This means that the performance of their investments can be influenced by what happens in other parts of the world.  Right now, for example, the U.S. is experiencing civil unrest in a period leading up to an election, the result of which may have serious implications for the U.S.’ relationship with other countries, particularly China.

Being prepared for volatility

Although each investor will have their own view of the current situation, it seems likely that most, if not all, would agree that we are currently living in interesting times.  What’s more, it’s hard to say when we’ll reach the “new normal” or what exactly that will be.  This means that investors who stay in the stock market should be prepared for volatility and a lot of it. 

Investors who are uncomfortable with the thought of having to weather stock-market storms might want to move out now and protect their capital.  This may not make for the best returns, but sometimes it can be worth paying for peace of mind.

Remembering the importance of staying focused

You can only aim at a target if you know what that target is.  Regardless of what is going on in the world, you need to think about what is right for you in your particular situation.  You then need to keep informed and equip yourself to take all investment decisions calmly and mindfully.