A Snapshot in Time
A snapshot of financial markets really can record the most remarkable moments. 20th April was the three-year anniversary of one of the strangest financial market events ever.
On 20th April 2020, the price for of the West Texas Intermediate Crude Oil contract went negative.
Although this market oddity only lasted a day, it was an extremely visible signal of just how strange the world was during the early days of COVID-19 lockdowns – and a great reminder that in times of panic, financial markets do NOT behave rationally.
Here’s another incredible oil-related example from the same period.
In mid-2020, Shell and BP were the fifth and eighth biggest oil companies in the world, between them employing 155,000 people, and generating $199 billion in sales.
At the same time, Zoom Video Communications had 2,700 employees, and was going to print around $620 million in sales in 2020.
Now, of course, 2020 was the year of Zoom. It became one of the key tools in our day to day lives – working, socialising, pub quizzing and so on. Even so, it was NOT more important than energy!
But investors were panicking, thinking that no-one would ever go outside again – bidding up anything virtual, and selling down anything related to the real world.
Which led to this surreal situation in October 2020 (circled), where Zoom was a $160 billion company, while BP and Shell were worth just $150 billion – combined!
Source: Bloomberg
Fast forward to today though – away from the COVID-19 claustrophobia and panic – and markets have re-evaluated.
Video calls are still important, but NOT the only game in town!
Oil is back at around $80; BP and Shell are worth more than $300 billion and Zoom is worth around $20 billion.
Decisions made in one-off scary or stressful moments are often affected by our emotions. What feels sensible at the time, can end up seeming surreal a few months later.
This article was prepared by Chris Green, our Head of Financial Planning. We always appreciate your feedback. If you have enjoyed this article or have any specific topics you would like to see addressed in future newsletters, please email us at FPTeam@city-asset.co.uk.