Some markets have taken a bit of a hit recently due to a mixture of economic policy and a shift in investing sentiment.
To give you some insight into what’s going on, I’m going to reveal the top ten stocks and shares bought on the Hargreaves Lansdown platform last week, along with what’s caused the markets to wobble lately.
[top_pitch]
Why have some stocks and shares been dipping?
You may have noticed that plenty of shares have taken a small tumble over the last week. There are several reasons why this is going on, but a significant cause is what’s happening in the US.
The US Federal Reserve (the central bank) has been slowly tightening its monetary policy. This just means it’s using a number of methods to reduce how much new money is entering the system. The Fed has also made clear that interest rates will be gradually rising. Rising interest rates, coupled with high inflation, are bad news for some stocks for two reasons:
- Higher rates of interest make it more expensive for firms to borrow, meaning returns can be generated through safer options such as bonds and gilts.
- Inflation means that the projected growth of some companies will be worse in real terms because the money generated will have less value.
How are investors reacting?
We’re starting to see some investors move into safer options. The most common route is likely to be value investing, where investors can put money into companies that are not trading at massive growth multiples.
This is because inflation will have less of an effect on these businesses that may have lower P/E ratios and are not considered overvalued stocks.
Unfortunately, what happens in the US tends to reverberate around the financial world. Many countries (including the UK) are also in a similar economic situation, so it makes sense that the reaction of markets will be similar. But it is interesting to see that the FTSE 100 has risen slightly, whereas the S&P 500 index has dipped.
What were the 10 most popular stocks and shares last week?
According to the latest investment information from Hargeaves Lansdown, these were the most popular stocks and shares bought on their platform last week:
| Position | Investment |
| 1 | Scottish Mortgage Investment Trust (SMT) |
| 2 | Tesla (TSLA) |
| 3 | International Consolidated Airlines (IAG) |
| 4 | Lloyds Banking (LLOY) |
| 5 | Glencore (GLEN) |
| 6 | Vanguard FTSE 100 UCITS ETF Dist. (VUKE) |
| 7 | iShares Core FTSE 100 UCITS ETF (ISF) |
| 8 | easyJet (EZJ) |
| 9 | Vanguard S&P 500 UCITS ETF Dist. (VUSA) |
| 10 | Microsoft (MSFT) |
[middle_pitch]
Do these choices tell us much about UK investors?
It’s interesting to see how these picks have changed from previous weeks to reflect what’s happening in the markets. A number of the shares that feature in the list are the same as last week’s. However, there are a few notable changes.
The first major difference is that there are two FTSE 100 funds in the top ten – Vanguard (VUKE) and iShares (ISF). The second big change is the presence of the Vanguard S&P 500 (VUSA).
So, it looks like savvy investors are beginning to concentrate more on the UK market. This is because there are fewer high-growth tech options and more solid cash-generating businesses.
The inclusion of VUSA and Microsoft (MSFT) also means some are viewing this downturn in the US market as a good opportunity to snap up stocks at a discount.
How do you begin investing in stocks and shares?
It’s a good idea to keep an eye on the big investing themes and discover what’s popular. It can tell you a lot about the current investing landscape.
However, the best way to see success in all climates is to build yourself a diversified portfolio using a top-rated share dealing account. This way, you’ll stand to make returns even when there are big changes in the markets.
It’s also a great idea to use an account such as the Hargreaves Lansdown Stocks and Shares ISA to hold your investments. It will mean you don’t have to pay tax on gains.
Just remember that all investing carries some level of risk. You may get out less than you put in, so always consider any investments carefully before getting involved.
