November has provided rare relief for UK share investors in what has proven a difficult year. The FTSE 100 and FTSE 250 are both up by healthy double-digit percentages since the turn of the month.
The share market rally has ground to a halt in more recent days, though, as investors await more news on a Covid-19 vaccine. News of soaring coronavirus cases in parts of the globe have tempered appetite for UK shares too. But it hasn’t deterred me from continuing to invest. I’m confident that British stock markets will bounce back strongly during the 2020s!
Taking a long-term view
If history shows us anything it’s that stock markets always recover ground after the immediate impact of economic and political crises. This is why I didn’t worry and sell my stock holdings when the Covid-19 crisis hit. In fact I continued to buy UK shares in my Stocks and Shares ISA despite the threat of a painful and prolonged economic downturn.
It’s important to remember that misfortune threw the kitchen sink at the global economy during the twentieth and twenty-first centuries. Yet economic conditions in Britain always recovered strongly within several years, corporate profits rebounded, and UK share prices bounced back as a consequence. Even world wars, pandemics, sovereign debt crises, banking sector meltdowns, and countless political upheavals have done nothing to stop the long-term ascent of global stock markets.
Buying UK shares for the stock market recovery
US share indexes have been quicker to bounce back from the Covid-19 crisis than their British counterparts. Just this week the Dow Jones soared smashed through the 30,000-point barrier for the first time. Meanwhile in Japan the Nikkei hit levels not seen for almost 30 years. It looks like UK share prices have some ground to make up, then.
The FTSE 100 rose to levels not seen since early June earlier this month, around 6,400 points. But Britain’s blue-chip index has since settled back and still remains some 1,200 points lower than it was at the start of the year. It’s also some way off May 2018’s all-time closing peaks around 7,779 points.
However, this recent underperformance is encouraging to long-term investors like me. It means I can continue to buy quality UK share at knock-down prices. And it leaves scope for a whopping rebound when investor confidence does recover in the weeks and months ahead.
Make no mistake: investor appetite for UK shares will recover as news flow surrounding Covid-19 improves and economic optimism flows back. And those that buy stocks today can make a killing when they rocket back in price. Remember that the FTSE 100 more than doubled in value in the nine years following the 2008–09 stock market crash. And the number of Stocks and Shares ISA millionaires soared as a result.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.