How the pandemic is making some investors super-rich

This ASX fund manager thinks that the coronavirus pandemic is making some Aussie investors very rich. Here’s how it works.
The post How the pandemic is making some investors super-rich appeared first on Motley Fool Australia. –

Cloud against blue sky with cash falling from it representing rich investors

By now, we’d probably all be familiar with most of the effects of the coronavirus pandemic that have come to dominate 2020. From working from home to food shortages at supermarkets, the pandemic has resulted in many changes across society. The same can be said of the investing world. 2020 has seen the S&P/ASX 200 Index (ASX: XJO), as well as markets around the world, have one of the shortest and sharpest market crashes in history, followed by one of the most rapid and enthusiastic recoveries we have ever seen. We have also witnessed the first recession Australia has had in almost three decades.

In Australia, it has been a recession like no other. That’s what a piece from Vimal Gor, head of bond, income and defensive strategies at Pendal Group Ltd (ASX: PDL) in the Australian Financial Review (AFR) asserts anyway. Mr. Gor points out that, unlike recessions of the past, the 2020 coronavirus-induced recession has seen an unprecedented influx of government spending, which has cushioned a large portion of the workforce.

Mr. Gor eloquently sums this paradigm up with the following:

Tragically, small businesses, particularly in hospitality, where people… create their own living, have felt the full impact. Public servants and most employees in big business, cashing their guaranteed pay cheques, have actually got richer. Most super funds are back to levels of a year ago and real estate prices are actually higher in many places. Hardly a standard recession.

Property and ASX shares set to benefit

He also commented on the government’s response to the recession. He noted that “the RBA [Reserve Bank of Australia] has flooded the system with cash… Not surprising then that when encouraged to invest, not save money, many reach for the only tool they know, property investment.”

And it’s not just property that Mr. Gor thinks will do well out of this situation. ASX shares also stand to benefit from the RBA’s actions, as Mr. Gor states:

Equities also promise to keep rising as the economy opens up. Some earnings may be under pressure for a while but with zero rates, massive fiscal stimulus and an improving economy, the highs from February are within our sights.

So, according to Mr. Gor, as a direct result of the RBA’s actions this year, property is set to boom, as is the share market. And he thinks this trend will continue for a while yet, noting that the Treasurer and RBA governor have both said they will “keep their foot to the floor for some time”.

So what does this mean for investors? Well, the report concluded with the following:

So we will leave this pandemic with a large proportion of the population richer. As per usual, owners of capital get rescued and policymakers wait for the trickle down.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How the pandemic is making some investors super-rich appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!