No more social distancing. No more masks. No more lockdowns. No more fear over infecting our parents or kids. No more panic over cleaning every surface. That’s the promise of a Covid-19 vaccine.
So it’s no wonder the news that Pfizer produced positive results from its Covid-19 vaccine trial sent stock markets crazy on Monday, 9 November.
The FTSE 100 bounced over 5% to levels not seen in months. Travel stocks like IAG and Carnival jumped more than 30% in a single day.
Covid-19 vaccine: what I’m doing now
My initial reaction was to do something. Anything. Capitalise. Buy something or sell something.
Any careful, proven investing strategy I might have developed went out of the window. The adrenalin swept through me, immediately turning my logic centres to mush.
On the other end of the scale from fear and volatility are exuberance and joy. And that’s something that many people will be feeling. Not just from an investing point of view, but on a human level.
I’m a hugger, you see. I’ve not been able to hug any strangers for nine months. It’s been torture. The idea that this dark period might be coming to an end with a Covid-19 vaccine? I’m opening the champagne.
But investing? No. Not today, at least.
The hero we need
News of a potential Covid-19 vaccine has produced extremes of emotion. Whenever I’m feeling like this I usually turn to Benjamin Graham. He’s not alive any more. In fact he died in 1976. But the author of The Intelligent Investor has been my constant companion on my investing journey. He usually has words of wisdom for every occasion. It’s no wonder Warren Buffett idolised his mentor so much.
The ones I’m choosing today are: “The investor’s chief problem — even his worst enemy — is likely to be himself.”
Perhaps the number one worst time to invest is when I’m feeling emotional. It’s certainly been the biggest killer of investment gains for me.
Excitement leads me to risk more money than I should. Fear leads me to sell more shares than I actually wanted to.
I wrote at the very start of this mad period — the worst stock market crash since 1987 — that I would turn off my phone. I said I’d also delete my investing apps to prevent any mistakes I’d regret. I think that’s probably solid advice for today as well.
My conclusion
If we think that normality can return to the world on the basis of this Covid-19 vaccine news, I see that as an overreaction.
The Pfizer vaccine is still in phase 3 trials and the data has not been peer-reviewed yet. The pharma giant itself has said that the reported 90% efficacy rate could still fall.
So there is much still to do before we have a solution to the coronavirus crisis.
And investors who have been hoovering up cheap UK shares by the thousands and waiting for the bounce? They’ll probably be fighting to log on to their investing apps to take short-term profits.
So this searing market rise may not last. While today might be a day to hug my family, it’s probably best for me to leave any investing decisions until the extreme emotion has subsided, I feel.
