Some elements of investing can be a zero-sum game.  When one side of an investment gains, the other side loses.  For those investing in GameStop, the profits made when the stock went up was reflected in the losses made by the hedge funds who were betting on the stock going down.  It is all well and good when the dice roll means you land on a ladder, but it is not so pleasant when you land on a snake.

So, it would appear that the Reddit bubble has burst and there will undoubtedly be some pain for those individuals who entered the battle late.  GameStop’s share price started the week at $316.56 and finished at $63.77, representing an almost 80% drop for the week, still significantly above its 52-week low of $2.57.

From a psychological perspective, we hope that these speculative episodes do not deter true investors from taking appropriate risks for their long-term investments, as they do not affect or influence our robust investment processes.

In a world that is waiting for vaccinations to inoculate sufficient people in order to ease lockdown restrictions, knowing that central banks and governments are still committed to providing liquidity and stimulus is critical.  This was underlined in the Bank of England’s Monetary Policy Committee minutes last week, where they explored the possibility of negative interest rates.  However, it was stressed by Governor Andrew Bailey that while we should expect the Bank of England to have investigated all monetary options, he did not want to send any signal that it intended to set a negative bank rate at some point in the future.  It is also clear that President Biden wants to reassure the US people  by pushing ahead with the latest instalment in a long line of fiscal stimulus plans.  The $1.9 trillion economic relief plan looks set to be pushed through, with or without the support from Republicans.

It seems that “doing whatever it takes” is the modus operandi for most central banks and governments during this pandemic,  and the originator of the phrase has returned to the political spotlight.  Former President of the European Central Bank, Mario Draghi, who adopted the phrase in 2012 to give reassurance that the Eurozone would not crumble, has been asked to head up the Italian government.   Can he repeat his success as Super Mario and stabilise a faltering Italy?

The final person sliding down the gameboard is Jeff Bezos who announced that he will be stepping down as Chief Executive of the world’s largest e-commerce retailer.  Climbing a ladder to fill those shoes is Andy Jassy, who was heading up Amazon Web Services and will have a big plate to deal with once the pandemic has receded.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete.  Unless otherwise specified all information is produced as of 8^th February 2021.

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