How to vaccinate your portfolio against coronavirus

Gold: boosted by the coronavirus

(Image credit: Getty Images/iStockphoto)

published 27 February 2020

This week brought a slew of interesting statistics on inequality in the UK. It turns out that income inequality is slightly higher than we thought (albeit not rising – which is good). More interesting, however, were the numbers on longevity equality. The latest show (pleasingly) that while the rate of increase in UK life expectancy has slowed we are still living longer than ever. Female life expectancy is now 82.9 years and male 79.5 years. However, these numbers do mask some miserable divergences: there is close to a 20-year difference in the length of the lives of those who live in the poorest and the richest areas of the UK. This is a gap that is going to get wider. That’s not because the life expectancy of the poor is likely to fall, but because that of the very rich will rise faster.

Anyone who came to our MoneyWeek conference late last year will have heard longevity expert Jim Mellon talking about the various expensive pills, devices and treatments he expects the rich to use to stay alive over the next few decades. Gradually they will pull further ahead of the rest of us. Many in the US currently believe they have a billionaire problem (too many people with too much money buying too much power. Not long now and they will have a billionaires-living-too-long problem as well. That’s something that will add a whole new dimension to the inequality argument. Politicians can’t promise to redistribute years lived quite as easily as they can promise to redistribute cash. Instead, when it comes to longevity the only equality option is to find a way to level up. That’s not easy – or cheap.

Shielding your portfolio from Covid-19

Still, while we wait for governments to catch up on this, what of the portfolio you are building to support the long old age MoneyWeek readers are likely to have? Last week I suggested that, with the fast spread of the Covid-19 a rising risk, you start shifting some money into the oldest and best of safe havens. If you used that as a reason to top up your gold holdings, you’ll be pleased. Most stockmarkets have had a horrible week, but gold hit a seven-year high on Monday. Whether it spikes higher or not in the next few weeks will depend on how the virus moves from here and how governments react to it. The more schools close, the more group gatherings are cancelled and the more freedom of movement is curtailed, the higher gold will go. We aren’t virus specialists, nor do we have any particular insight into how global governments will manage the crisis (beyond knowing that it won’t be satisfactory), so we can’t make a perfect call on that.

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What we can do is suggest that you think of safety first when it comes to your investments (I’m taking it as a given, by the way, that you are doing the same with your health). If supply chains falter and global profits take a nasty hit – which they will – where might your money be safe (or at least in less danger) at the moment? In this week's magazine Max King gives his take on this (you can mitigate your equity risk with careful buying of bond funds); we explain why Japan, while not exactly holding up nicely in the face of crisis, is at least cheap; and John Stepek has some wise words on the market’s most obvious contrarian trade. The virus might just be marking the turning point to value we’ve been expecting for some time.

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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.