E Intelligent Investing: Where To Invest During Economic Precarity

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There have perhaps been fewer times in history where we should reconsider our investing strategies than today. With unprecedented health, crises come unprecedented economic precarity. The global economy has been shaken to its core as a result of the global pandemic - arousing the closure of shops, devastating effects on GDP and disposable income and has left investors with a rocky road to navigate.

As for the UK - she’s enduring the worst recession on record, as official records show. After a long period of economic prosperity, prompting investors to grow their appetite for risk, branch out, and diversify their portfolios further; we’re now in our first recession for 11 years. After GDP fell by 20.4% between April and June 2020 (the biggest slump ever), investors are looking for safe ways to position their portfolios. 

A country falls into a recession if GDP falls over two consecutive quarters. In the UK, that’s the value of all goods and services added up, of which plunged by 20.4% in three months. To shed some light on this figure, the UK saw a 2.2% drop in the first three months of 2020. The Office for National Statistics attributes this directly to the halt in services, production, and construction.

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Recession

2020 recession hits hardest since 1990. Source: (World Bank)

The last time the UK was in a recession in 2008-09 as a result of the banking crisis, it lasted for five quarters. With no definitive answers on the future development of the Coronavirus, there is no telling how long we’ll remain in economic stagnation. What’s for sure, is that despite the length, the aftermath will be just as devastating. Officials predict the recession to have a significant impact long after the virus is gone. 

What does this mean for investors? 

No one knows that the path to economic recovery will look like - making it even more difficult for investors to strategize accordingly. Most people are hoping for a V-shaped, swift recovery that will see things go back to normal once restrictions on businesses and consumers are lifted. 

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Disclosure: Daglar Cizmeci is the co-founder of ARQ, which is recommended in this article.

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