There are risks to the foundations of the S&P 500’s current record run – and British stocks either do not face the same issues or will actively benefit when things turn.
The first is a vaccine – now the single most important factor. The ability to entirely come out of lockdown and kickstart the economy would save businesses from ruin and eventually drive optimism back into the British market.
If you expect a vaccine then the logical thing to do would be to buy banks, hotels, airlines and oil stocks, said Mr Bell. It’s worth noting none of those industries appear in the list of the S&P 500’s biggest sectors.
The second is political risk. A Joe Biden win, alongside the Democrats taking both the Senate and Congress, would inevitably mean tax rises for American businesses. JP Morgan has calculated this will amount to a 8pc hit to profits. American pharmaceuticals would see a further reduction following intervention in drug pricing.
A vaccine would cause investors to shift from the “Covid winners” like Amazon, Alphabet, Apple and Microsoft towards the cheaper parts of the market, both in the US and in the UK. A Democrat victory would compound problems for the S&P 500 leaders, and expected fiscal support would benefit businesses languishing at the bottom of the returns table.