I awoke this morning to what will be described by the media as a ‘Sea of Red’ – which is significant falls on the vast majority of major markets that had already started trading and predictions of the same for the FTSE here in the UK and on the European exchanges.
Sure enough on the opening bell, the FTSE was down close to 3% at one stage, with the European markets down around 4-5%!
Not only that, but commodity prices spiked to new records in many cases with oil up at around $139 a barrel (a level not seen since 2008) and the price of gas rising yet again – up some 70%+ at one stage during the morning.
Cue the usual media favourite blood-pressure-inducing language such as ‘carnage’ and ‘turmoil’.
Now, first off, let’s put things back into perspective from a market point of view:
1. The falls on the market have actually recovered pretty quickly and the FTSE is currently up around 0.4% at the time of writing just after lunchtime. Yes, we saw significant falls on Friday as well, but this just goes to show how quickly these things can turn around. The headlines tend to linger long after the event is over!
2. Most major markets are still showing a gain over a 12 month+ time period – showing the value of a long-term mindset.
However, all of the above really does seem like ‘just noise’ to me given what is going on in the world, so let’s put things back into perspective at a higher level:
1. I am sure for most Ukrainians and those in the surrounding countries, the value of their portfolio is the last of their worries at the moment. Despite some truly harrowing footage over the past 12 days or so, the video on the BBC over the weekend of people fleeing during the supposed ceasefire, to then find shells and bombs going off metres from them and their families, really did get to me. I was close to tears at one stage – I simply never thought these were scenes I would see in continental Europe during my lifetime.
My heart bleeds for those individuals and families who have lost someone in the conflict or who are separated from loved ones, who have left everything behind and have fled to a new country, perhaps never to return. I can’t even imagine what they must be going through right now.
2. Closer to home, the above news will add even more pressure to already squeezed household budgets. Even this seems rather trivial in light of the above, but it will seem far from trivial to those families who, in some cases quite literally, will now be choosing between ‘heating and eating’.
In the past couple of days, I have had two conversations with friends and contacts who, perhaps a month or two ago, had a £50 surplus at the end of each month, who now find themselves with a £50-£100 deficit having just received their new energy tariffs.
That is before you factor in the cost of petrol to get them to work and the cost of the food bill at the end of each week. Although they come to me for advice as ‘the money person’, there is not much I can do in this situation other than ensuring them that they are on the most competitive (or should I say ‘least worst’) energy tariffs or suggest they pick up some extra hours or find a second job – not exactly practical for families who already work full time and have children to support.
Now, please don’t get me wrong – none of this detracts from our job which is to look after your portfolio to the very best of our ability and to provide reassurance to those more nervous clients that ‘this too shall pass’ and things will get better eventually.
However, at times like this, I am grateful that I have a portfolio to worry about and that this is all I have to worry about. So yes – the news today will be concerning and I should imagine we will have more concerning market-related headlines in the days to come. But spare a thought for what is going on out there in the world, put things into perspective and appreciate the fact that we are, for the most part in the Buckingham Gate community, safe, warm and generally financially secure – these things feel very valuable to me right now – perhaps more so than at any time I can remember.
As always, we are here if you need us for any of your financial planning needs.
