In the short term the outlook for stocks (and pretty much everything else) depends on the evolution of COVID, and how governments, households and businesses respond to it. These are big unknowns. Activity is down since the beginning of the year and unemployment is up. The timeliest indicators of UK demand have for now stabilised at very low levels. This has caused firms to cut investment, reduce working hours and, in some cases, lay off workers. It’s a risky backdrop for investors. There are big opportunities for contrarians with an informational edge, but for many others the best course of action might be to build a robust portfolio of strong, quality companies bought at reasonable prices. In amongst the uncertainty there are pockets of the economy that are safe and even stand to benefit. Identifying these industry groups and then looking through some of the highest quality candidates with the strongest momentum might lead us to companies that are well placed to continue growing. Life after lockdown We can’t get excited about a return to normality anytime soon, but as the saying goes: this too shall pass. In amongst all the grim headlines there are some green…
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