World stock markets have soared today on the back of some very positive news about employment figures in the US.
US unemployment figures have hit a four year low with jobless numbers falling 7.5% in the month of April and 165,000 new jobs created. These figures were announced today by the US Labor Department.
As I write this the FTSE 100 index of leading UK company shares is up 73.48 points or 1.14% higher.
So what?
Well what is important about this is the impact positive news like this has upon the value of our investment and pension portfolios.
The media tends to quickly highlight the fall in share prices usually with emotive headlines like “£10 billion wiped off the value of our pension funds today” but rarely quotes an equivalent value being added to the value of pension fund.
Good news I guess tends not to sell newspapers.
But just how important is this news, what does it really mean?
Leaving aside the positive impact that it will have upon a lot of US families and the firms and people they do business with, it does, as I said, have the benefit of raising the value of our pensions and investment funds.
But most if not all of our clients are in their investment and pension funds for the long term. What really matters is the value of their money when they reach the point where they want to take and enjoy the benefits.
As I recall saying when interviewed by CNN at the start of the credit crunch and the world wide investment market crash, “this will one day just be a blip on a chart!”
So today’s world wide stock market rally will also just be a blip on a chart in a month, six months or ten years time.
What it should not do is cause people to rush into buying shares when they don’t need to. Or selling the shares they hold in non-US firms and piling into US equities.
In the same way that we should not get overexcited about stock market values falling we should also remain calm when stock markets rush up.
