The Value of Investments

The question I get asked more than most at the moment is: “Why are investment values going up when we are in a pandemic?”

It is a natural question to ask because most people would assume that during a crisis as severe as this one that values would take a hammering.

The reality is somewhat different. Thanks to various quantitative easing policies in the UK and elsewhere and major financial boosts such as President Biden’s $1.9 trillion stimulus package, a huge wall of money is created.  

This wall of money finds its way into assets like shares and property, in turn forcing up values.

Shares have performed particularly well because they are the easiest tradable entity and they would appear to have the best prospects for the near future.

There is, however, a requirement for realism otherwise you simply end up with over valuation and the big risk of inflation with the resulting divide between winners and losers. 

Financial ups and downs and volatility are a fact of life – exacerbated by major economic shocks caused by global events like this pandemic.

All of which highlights the critical importance of having a long-term financial plan which is robust enough to withstand the headwinds of the global economy.