In normal times, it is often said that the stock market is a reflection of the economy. However, by almost every measure, 2020 has been anything but ‘normal’. A global pandemic (which is still unfolding) has claimed over one million lives and led to the first recession in more than a decade for a number of countries.
Since the end of the first quarter, we’ve seen a recovery in global stock markets with many indices around the world, including the NZX 50, making record highs. All this despite some bad economic news.
For example, in September, Statistics New Zealand confirmed New Zealand went into a recession in the second quarter of the year. However, the news didn’t stop the stock market’s upward trend – a good example that bad economic news doesn’t always translate to bad performance in the stock market.
This is where the value of active management comes in. Our team of specialists follow the ups and downs and the underlying events that often precede these movements and are able to position our portfolios to try and withstand downturns.