We could be heading for another Roaring Twenties
There are still plenty of risks ahead, but if we get a vaccine by spring we could see a better-than-expected recovery as we reclaim the bits of our old lives we loved, and dump the bits we didn't.


If you watched our interview with Jim Mellon last week (see moneyweek.com/videos) – or read the summary in the magazine – and then went out to act on the specific advice he gave on Friday afternoon, I suspect you have had a pretty good week. Jim told us that a vaccine was closer than most people thought; that we should remember that the pandemic that broke out at the end of World War I was fast followed by the Roaring Twenties; and that we should hoover up the kind of companies that would provide the goods and services people would really want post pandemic. He was, he said, buying IAG (parent of British Airways); Marston’s; and (as a play on cheap UK) Lloyds. On Monday, we learnt an effective vaccine really is on the way. IAG rose 25%, Marston’s 23% and Lloyds 10%. Nice.
At the same time the stocks geared to working from home and lockdown in general mostly fell: Zoom was down 17% (albeit in the context of a 500% rise this year alone) and Peloton (producer of high tech indoor bikes some of you will know more about than I ever want to) fell 25%. There are vaccine naysayers aplenty out there. Both Boris Johnson and Nicola Sturgeon have been quick to say that the news doesn’t necessarily provide a fast route to the return of our freedom (and by extension the extreme powers they have given themselves over our lifestyles). But it certainly should: if anything, as we observe in our Briefing this week, too many people are spending too much time worrying about logistics and too little noting the extraordinary scientific achievement this represents (and suggests is possible in the future).
If it is rolled out from December and the vulnerable (the old and the unwell) are vaccinated in a matter of months there is no obvious reason for any restrictions to remain at all by the early spring at the latest – given that the mortality rate for anyone outside the vulnerable groups is absolutely minute (the US CDC puts it at 0.5% for 50- to 69-year-olds). For consumers, businesses and stockmarkets that is an absolute game changer. Why? Because it means that instead of discounting an endless virus and politically driven stop-start future, we can start to imagine a straight-line recovery. You could then expect a huge surge in demand for consumer services from populations that are cash rich (most people have saved money during the pandemic); fed up; and ready to spend. Add in the operational changes and productivity gains (cost cutting and digitalisation) forced by the pandemic (or in some cases given cover by the pandemic) and you should see some fairly stunning earnings momentum start to get going. Time perhaps to load up on the cheap UK stocks geared to a rather-better-than-expected cyclical recovery (and don’t forget that as things stand we are near the front of the vaccine queue).
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There are nasty risks of course (the debt overhang and rising unemployment being the obvious ones). But there is a reason the market has performed as it has this week: if things go even reasonably well from here we will soon be able to reclaim the bits we liked of our old normal (pubs, planes and parties) while reserving the right to dump some of bits we never really liked (commuting every single day and not having the faintest idea who our neighbours are). Roaring Twenties? Maybe.
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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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