On 26 March 2020, lockdown measures legally came into force. On that day, Barclays (LSE:BARC) shares were trading around 106p per share, up from a few days prior. The FTSE 100 stock then fell in the following days. While I don’t have the precise reasoning for the movement on either side of this date, it’s important to remember just how much data investors, and all Britons, were trying to digest as the pandemic hit.
However, an investor brave enough to take the plunge on 26 March 2020 would have seen an approximate 200% gain. That would have taken a £10,000 investment to £30,000. There’s dividends to consider as well, adding a further £1,800 over the period.
Investing amid downturns
I was recently listening to a presentation from Holland Advisors during which the presenter talked about the benefit of investing during the maximum panic stage of a downturn. This was in the context of Trump’s tariff announcements in early April.
Investing during downturns can offer significant rewards, but it also comes with plenty of risks. When markets are gripped by panic, as seen during the first Covid lockdown, share prices can fall sharply. This often creates opportunities to buy quality companies at discounted prices.
However, it’s important to remember that catching the bottom’s extremely difficult, and prices can continue to fall further than expected. Emotional decision-making and herd mentality can lead to poor investment choices during these periods.
There’s also the risk that some companies may not recover, especially if the downturn exposes underlying weaknesses. But investing during maximum panic can also yield strong returns if markets rebound. It requires a clear strategy, thorough research, and a willingness to accept short-term losses for potential long-term gains.
Therefore, caution and patience are just as important as courage in these moments. I actually initiated only a few new positions during the April downturn, investing in Alphabet, Jet2, and Pinterest. I also opened positions for my daughter in Marvell Technology and RH. These were cautious moves. Personally, I’d suggest the rally is overdone, but that’s a thought for another day.
Is Barclays still worth investing in?
Barclays may warrant consideration from investors looking for value and earnings growth. The bank’s trading with relatively low forward price-to-earnings (7.4 in 2025, dropping to 5.2 by 2027), with earnings per share forecast to rise from 40.2p to 57.6p. Its diversified business model, including investment banking, provides resilience and flexibility, and a conservative payout ratio (around 22%) supports both dividends and substantial share buybacks.
However, risks remain. Barclays’ investment banking division is exposed to significant market volatility, which can impact earnings, especially in uncertain global conditions. Broader macroeconomic risks, including potential fallout from US trade policy changes, such as new tariffs, and ongoing geopolitical tensions could also affect the UK economy and Barclays’ performance.
As with any investment, it’s important to weigh these risks against the potential rewards and consider whether Barclays fits your risk tolerance and investment objectives. Personally, I’d consider buying more, but my holding’s already sizeable relative to the rest of my portfolio.
