Year-end Boom or Christmas Gloom?

Each year we measure our success by the yearly performance of the funds and overall growth from the assets we invest in.

This year is no exception, and whilst we have had a predominantly good year for investment returns, we always look for that Santa Rally in December. The phrase ‘Santa Rally’ was first used in 1972 and, since that day, has been used to describe the general upward trend in the retail markets and thus an increase in stock values.

So, will this be the case this year? Up until the announcement of the Omicron variant, it seemed it would, and now we are just faced with volatility and a general fear factor of what may prevail.

I wonder if this had come at a time, close to the start of Covid, what would be our fear levels then? Like many other people, we must consider the extensive research in how the coronavirus works, the development of the vaccines, and the adapted versions to take us to the next level of protection.

How will this then affect the markets? It seems like it could be a 50/50 split, with some thinking the worst is yet to come. Then the other half thinks we will be ok as we are alerted due to all the medical developments that have taken place in the last 18 months.

What can be said is that a company stock does not change just because of the introduction of this new variant, they are a much bigger picture than that. So this means that holding an asset now, is not about how it performs this week or next, but how it caters to your needs over the longer term.

This type of investing is precisely what people should keep in mind, forget the instant social media updates; you won’t sell just because you saw a friend make a profit of 30% in 1 week, and you probably won’t sell when the next friend makes a 40% loss. We must consider the objective of this investment; why did we invest in the first place, are we on target to reach our goal? If you can answer all these positively, then why worry?

In times like these, with downward movements, we should buy more, especially the stocks we like that were just too expensive before; they may now show good value, so why not invest in taking advantage of the future upward trend?

We also have to consider the inflation worries that were at the forefront of everyone’s mind just a week or two ago. The variant could cause damage to the market, but it could also rescue the rising inflation fears, which could be seen as a positive and, in turn, see prices rise in the stock markets. When one cloud comes along, the next phase is sunshine; we should always look for the brighter side of life. The negatives will pull us down and, in turn, destroy the creativity that so many of us need in our lives.

Stock markets are the same; they feed off good and bad news, sometimes adversely or conversely affecting the stock prices.

So all that being said, what does the end of the year have in store for us? The statistics state, on average, 83% of the time, we have seen a December surge in prices. We have also seen a real return to growth from both UK and US stock markets, 8.5% from the UK FTSE-100 Index and 22% from the US S&P 500 Index.

Even if Omicron does develop, we see that 2022 will be a good year for the market, a good year for business and strong across most developed countries

It comes from positive developments with Covid handling and industry resilience in tackling this.

Santa lives in all of us at this time of year; we look forward to the smiling faces of the children, the happy atmosphere when all the family are together at this magical time of year. So why not believe in the Santa Rally? It may just happen to you!

Either way, we wish you all a very Happy Christmas and look forward to speaking with you in the New Year.



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