Investor sentiment remained bullish in December driven by optimism related to the vaccine rollout (Source: Financial Express). This was in spite of the emergence of a new variant of COVID-19 which has led to extended lockdowns in the first quarter of the new year. But markets are clearly taking a long-term view and the focus is on the light at the end of the tunnel, not the (hopefully) last hurdle.
The other main event affecting at least the domestic market, in December was the last-minute Brexit deal. The UK stock market rallied in relief by 3% over the course of the month, but a stronger pound (bad news for exporters) and the spike in new COVID-19 cases dampened the rally (Source: Financial Express).
As the last month of a historic year comes to a close, it is clear that the equity market champions of the year have been the US, Japan, and China. And the biggest loser of all major global stock markets was the UK, delivering the worst annual return since the height of the financial crisis in 2008 (Source: Financial Express).
This year has taught us many lessons, but it has also reinforced the importance of two of the most basic lessons of investing: Ensure your portfolio is well diversified, and follow the old adage of “time, not timing”: take a long-term approach to your investment strategy rather than trying to second guess unpredictable short-term market movements.
On that note, bring on 2021!
The information in this post is not financial advice, it is provided solely to help you make your own investment decisions. If you are unsure about whether an investment is appropriate for you, please seek professional financial advice. You can find more information here.
When you invest you should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return.