2020 is a difficult time for investors in UK shares. On the one hand, fears of another painful stock market crash linger in many share pickers’ minds. But then there are scores of top-quality UK shares that appear too good to miss.
In confusing times like these it’s worth listening to the experts. And top UK fund manager Terry Smith is one of those whose take on the current investing climate should be taken seriously. Through the success of his Fundsmith Equity Fund, Smith’s carved out a reputation as one of the country’s best commentators on UK shares.
Terry Smith says shares could soar!
Smith certainly made my ears prick up with his bullish comments in an interview with Sky News on Wednesday. In it the investment guru made an interesting parallel with the “unusual” circumstances of today with those of a century ago when another flu pandemic was in full swing.
“The Spanish Flu of 1918/19, which killed about 50m to 100m people… was followed by the decade of the ‘Roaring Twenties’ when particularly in America we had an enormous economic and stock market boom,” Smith said. He speculated whether the current circumstances could present a similar bounceback this time around.
While some sectors are doing badly, like airlines, hospitality and bricks-and-mortar, there are equally some that are “booming”, Smith noted. This includes companies involved in e-commerce, digitalisation and remote working. And these growth areas could be the lynchpin behind a stunning rebound in share markets, he said.
The FTSE 100 boom
As Smith says, Covid-19 presents an unusual challenge but it is not exactly unprecedented. So while for many it seems like the coronavirus crisis has ushered in a dark new period for the global economy, past form suggests the case is anything but dark. And as a consequence, I believe that buying UK shares today remains a good idea.
Recent history shows just how strongly share markets can recover from colossal macroeconomic, geopolitical and social challenges. The last time we suffered a huge stock market crash in 2008 and 2009, it seemed like the global banking system was about to collapse. It looked as if the eurozone was about to implode as sovereign debt levels in Mediterranean countries ballooned.
Yet in the following decade the prices of UK shares rocketed. The FTSE 100, for instance, more than doubled in just nine years, from around 3,800 points in early 2009 to above 7,500 points in summer 2018. As a result, those who bought UK shares during the depths of the crisis made a fortune during the subsequent years. A great many even became stock market millionaires.
I’m buying UK shares in an ISA
Like Terry Smith, I reckon a stock market rebound could be just around the corner. It’s why I myself have continued to buy UK shares in my ISA, despite the Covid-19 crisis. And with the help of the experts at The Motley Fool and its exclusive reports, you and I can make the most of the recent stock market crash and possibly make a million too.