Experts and Analysts

So often, we hear prophecies about the future direction of travel for markets from so-called ‘experts’ and ‘analysts’.

Now, please don’t get me wrong, I will always talk about my views and opinions on what is happening or what might happen in markets, politics, tax legislation, etc. In fact, I love to have these conversations. However, I am always very clear that I “don’t have a crystal ball” and that markets have usually priced in all known information, and so generally the only thing that moves markets is new, currently unknown information, which subsequently comes to light.

The issue I have is that these so-called experts and analysts seem to act as if they do have a crystal ball. As if they can see the future. They seem to state their views and opinions as facts and because they are “experts and analysts” they must know what they are talking about – surely?

Richard

I could write a post today about Boris (sort of) resigning and the resulting political turmoil. However, that situation is moving at a million miles an hour and the post will probably be out of date by the time I have finished writing it.

Suffice to say that the Buckingham Gate Investment Committee is in regular communication with our investment partners and we will be considering the implications for client portfolios, however, for the time being, the markets seem pretty content with an end to the circus surrounding Westminster in recent weeks.

I am going to write instead today about Richard.

Should I De-Risk My Portfolio?

It is fair to say that the past few weeks have been pretty choppy for markets.

We have seen some reasonably significant falls in both the US and the UK in recent days as the markets digest forecasts of inflation being higher for longer, economic growth slowing (and some countries now forecasting a mild recession) and supply chains continuing to be disrupted.

Given this outlook, we have been asked by a few clients in recent weeks whether they should look to de-risk their portfolio to prepare for what’s to come.

As sensible as this might sound, we actually think it could prove very damaging for your portfolio over the long term for all kinds of reasons.

Climbing The Wall Of Worry

During times like these, it can be helpful to remind ourselves of some of the past events that we have lived through and how the stock market crashed (and then duly recovered) during what at the time probably seemed like unprecedented crises.

It is often said that markets climb a wall of worry, referring to the fact that markets seem to constantly be worrying about something, however they still march on upwards over significant periods of time.

If you will indulge me for just a moment and set aside the first 4 months of 2022 and take yourself back to 31st December 2021.

The Folly of Leaving Cash in the Bank

The markets are a slightly scary place right now. Indeed, I commented in my recent blog that we are seeing signs of people ‘abandoning their plan’ by, for example, not paying into ISAs this year because they perceive it as ‘too risky’.

If anything the opposite is true, equities are almost universally cheaper today than they were at the beginning of 2022 and surely this presents a more attractive opportunity to buy, yet people seem nervous given that markets have fallen.

Equally, inflation rates have rocketed across the globe, so the risk of holding cash and seeing its purchasing power eroded by inflation is greater now than it has been for many decades.

The below article from our partners at Square Mile urges investors to think again about holding cash. I think it is an excellent read during times like these.

Don’t Abandon The Plan

The month of April was somewhat unusual in several ways.

First of all, we saw the conflict in Ukraine drag on far longer than anyone would have liked and it now seems to be somewhat likely that it will continue for many months (or even years) yet.

Second, it seems we are still not ‘done’ with Covid with it causing problems here at home in the form of yet more staff absence within businesses and all of the associated challenges that that brings. Not to mention the far more serious and significant measures being introduced in other parts of the world.