We just had one of the best days for the FTSE 100 since the Covid-19 pandemic hit.
The so-called Biden bounce had been pushing world stock markets up. And by midday Monday, the FTSE 100 had gained a few percent. Then the latest coronavirus news broke. The vaccine being developed by Pfizer and BioNTech has apparently had a 90% success rate in preventing infection in its latest trial. Pfizer called it a critical milestone.
Investors piled into FTSE 100 shares, briefly bringing some online trading platforms to a halt. At market close on Monday, the index was on 6,186 points for a 4.7% rise on the day. But that’s nothing compared to the gains made by some of the shares most badly depressed in the 2020 stock market crash.
The big FTSE 100 winners
Lloyds Banking Group shares gained 12% — still 50% down year-to-date, mind, and one I still rate as a buy. Barclays did even better with a 16% gain. In other sectors, BP had a good day with a 15% jump, and housebuilder Taylor Wimpey shareholders picked up a 19% gain.
The FTSE 100’s two biggest winning positions of the day were grabbed by stocks that have been hammered by the near-shutdown in the aviation business. In second place came British Airways owner International Consolidated Airlines with a 25% leap. And Rolls-Royce, up 44% at close, took the top spot. At one point, Rolls shares briefly reached a gain of 97% before the price dropped back.
Both stocks are still on massive falls so far in 2020, though. IAG shares are down 79%, while the Rolls-Royce share price is down 85%.
What will I buy now?
My first reaction to bad news is always “Don’t Panic!” Today my feeling is a kind of “Hold on a minute” thing. The vaccine news is obviously very welcome, but I think it’s vitally important not to think everything is all fine now. It isn’t. And the FTSE 100 is not yet back to same outlook we thought it had a year ago.
The vaccine results have not yet been peer-reviewed, we have no idea how long any immunity might last, or with what virus mutations we might still have to deal (like the mink one). And it will take quite some time for the necessary billions of doses to be produced, shipped and administered. I seriously doubt life will get back to normal any time soon.
Long-term is looking good
I’m still positive about the long-term future for FTSE 100 shares, so what’s my approach to buying now? It hasn’t changed at all, but I do think we might finally be edging past the best bargain buy time. My idea of the best shares to buy now is exactly what it’s always been. By that, I mean shares that I think will be significantly ahead in 10 years’ time, whatever happens tomorrow, or next week, or over any short timescale.
I am, once again, drawn to Warren Buffett’s suggestion of investing in shares that I’d be happy to buy today if I knew the market was going to close tomorrow for 10 years.
