Making Investment Decisions Based on Data During a Pandemic

In 1976, the UK government, led by James Callaghan of the Labour, borrowed the sum of $3.9 billion from the International Monetary Fund. The granting of the loan was based on the condition that government fiscal deficit be slashed as a percentage of GDP.

A couple of years later, the chancellor of the exchequer at the time of the IMF loan said this below.

‘If we had had the right figures, we would never have needed to go for the loan”

That’s right!! The decision to borrow money from the IMF was based on wrong data. The public borrowing figures which prompted the UK government to seek IMF loan in 1976 were subsequently revised downwards sometime in the future.

Right now on the 20th of June, 2020, some investors are looking at economic indicators as proxies to invest their income in the four product groups - Currencies, Equities, Fixed Income and Commodities.

In my opinion, investors, especially new ones, should be a bit cautious on using economic indicators. My caution is based on the assertion that collating data that provides the vital information on which economic indicators are built on will be challenging due to COVID-19 pandemic.

Note: If you live in the UK , the office for national statistics website is helpful to get official data on the economy.

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