Not all US stocks have gone up in 2020

Well, 2020 has been a strange year so far for equity investors; the early gains of global equity markets in the first couple of months turned into material – and rapid falls – in all equity markets. Yet, as we sit here in the early days of Autumn, global markets are more or less back where they were at the start of the year, although the UK is a laggard. Thank goodness for diversification. Across the pond, the US market has rebounded strongly and the tech stocks such as Apple, Google, Amazon, and the electric vehicle firm Tesla have appeared to defy gravity. Hands up all who wishes they owned more US tech stocks?

Sometimes the disconnect between what is happening in the economy and what is happening on Wall Street is hard to reconcile in one’s mind. However, we need to remember that the market looks well beyond our current challenges and discounts all future earnings into prices. To those who believe markets work, this represents the best guess of the value of a company today, given the information we have available to us. To others it may feel like bubble territory and a big momentum play into a few companies getting lots of media attention and investor dollars.

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