Is the Fomo rally the real deal, or will shares fall again?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 1 May 2020

⏱️ 50 minutes

🔗️ Recording | iTunes | RSS

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Summary

It’s been called the Fomo rally, as shares picked themselves up off the floor after a diabolical March and bear markets turned bullish.

The FTSE 100 closed a notch below 5,000 on 23 March, the day it was announced Britain was going into lockdown, but somehow managed to bounce 23 per cent to the middle of this week before slipping back.

In the US, April was even more astonishing – the S&P 500 had its best month since 1987.

So, what’s going on? Is this the stock market signalling the start of a coronavirus recovery, or have investors merely been piling in driven by Fomo – the fear of missing out.

The big US tech names’ star turn has helped drive confidence and in the UK it has been the big names hit hard that have rebounded over the past four weeks, including housebuilders, Next, Cineworld, ITV and the FTSE 100’s top riser is cruise ship firm Carnival – up 63 per cent as brave investors buy in.

But are investors getting ahead of themselves and simply all chasing in the same direction like kids with a football?

On this week’s podcast, we look at the rally, what’s driving it – beyond Fomo – and the history of false dawns in stock market crashes, known as the dreaded dead cat bounce.

Simon Lambert and Georgie Frost also discuss how Britain gets back to business and how the plans might shape up for getting us back into factories, offices, shops, pubs, restaurants and everywhere else.

Plus, would you dare book a holiday now? If so, the podcast duo discuss what you need to consider.

And finally, the clock has have passed by quickly for a generation of cars that some of us grew up with and the Metro, Fiat Panda and early Vauxhall Astra are now 40 years old, tax exempt, and theoretically classic cars… but are they?

Transcript

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0:00.0	Welcome to This Is Money. I'm Georgie Frost and alongside me today is editor Simon Lambert.
0:05.0	And Boris is back. We're over the peak apparently and plans are afoot to get Britain up and running again.
0:11.0	We'll get more detailed plans from the government next week about easing lockdown, but how are businesses preparing to get back to work?
0:19.0	Also today, predictions about the housing market too optimistic?
0:22.7	Are those about the travel industry too pessimistic?
0:25.7	Would you book a holiday now?
0:27.3	Also, is the stock market rise since lockdown, a V-shaped recovery or a dead cap bounce?
0:32.4	And for a little bit of light relief, we look at the crap cars that are officially classics.
0:36.9	And don't forget you set out to date with all the latest breaking money news, just go to this ismoney.com.
0:41.2	UK or download the app. But first, before we get into Britain back on its feet again, there is one
0:48.8	area which didn't seem to get the economic gloom and doom memo, and that is the stock market.
0:53.7	Since the initial
0:54.5	turbulence when the Futsi 100 closed down 35% below 5,000, well this week it comfortably closed
1:02.7	above 6,000, a gain of 23% at a time when we've all been told to stay at home. Four million
1:08.9	workers have been furloughed and the consumer economy has been substantially poor. So Simon, what does it all mean? Is this a sign that
1:16.9	things just aren't as bad as we feared? Not quite. And in fact, they've coined a phrase for this
1:24.1	over the Atlantic in the US and it's being called the FOMO Rally,
1:29.5	fear of missing out rally. So what's happened is you need to bear in mind that stock markets
1:35.8	and economic data don't usually move in lockstep with each other. In fact, the stock market
1:43.3	tends to anticipate the downturn and shares
1:45.8	tend to get sold off quite heavily before that arrives. By the time you're actually in
1:50.5	recession, you might even find that the stock market is switching into recovery mode. However,
	...

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