“Carnage in bond markets”<\/strong><\/p>\n “The death of the 60\/40 portfolio” (I will come back to this in a moment)<\/strong><\/p>\n <\/p>\n You\u2019re far less likely to see a headline on your favourite news site that reads:<\/p>\n “Stock markets make steady gains over the long term, as usual”<\/strong><\/p>\n “Markets up 1.2% this week”<\/strong><\/p>\n “Totally normal stock market behaviour (that sometimes involves periods of volatility)”<\/strong><\/p>\n What I find funny, is that our inner chimp draws us to extrapolate short-term patterns (the market has fallen for the past 6 months, so surely it will continue to fall for the next month etc), while simultaneously often leading us to ignore the much longer-term (and more consistent and reliable patterns) that those short-term patterns are part of (the market has consistently delivered above-inflation returns, on average, over multi-decade time horizons etc).<\/p>\n We are compelled to buy into the ”This Time It Will Be Different” headline, only that on reflection, it has never “been different”.<\/p>\n The markets have consistently recovered from everything the world has ever thrown at them over the past 200 or so years of modern stock market history. Of course, one crisis is usually different from the next, but what is not different is the consistency and reliability with which they have recovered from these crises.<\/p>\n Now, some might accuse me of always banging the same drum, however it is an important message to repeat. Investor returns during times like these are almost always a function of investor behaviour – it is our decision making process that has the biggest capacity to create gains or losses in our portfolios.<\/p>\n Although it is a little technical in nature, I would draw your attention to this article from Vanguard which I stumbled across the other day. It was written in June, however the message is still perfectly relevant today. I think this article gives a more balanced view to the headlines around “The Death of the 60\/40 Portfolio”:<\/p>\n https:\/\/corporate.vanguard.com\/content\/corporatesite\/us\/en\/corp\/articles\/like-phoenix-6040-portfolio-will-rise-again.html<\/p>\n Which brings me onto another subject which is a hot topic at the moment –\u00a0changes and switches within portfolios.<\/strong>\u00a0The Buckingham Gate investment team, in conjunction with our partners at Square Mile are monitoring portfolios constantly to see if the Asset Allocation or Fund Selection needs to be changed.<\/p>\n We had a lengthy investment committee meeting this week, the outcome of which was a decision to make no changes to our Passive Portfolios for example. During periods of market stress, it is compelling to think that there should be lots of activity and changes within portfolios, that we should be ‘doing something’ about the current situation.<\/p>\n However, these kind of moves are often counterintuitive as we are reacting to events that have already happened (and by definition that means that the market has already moved in response to those events).<\/p>\n In many cases, it is discipline and holding our nerve that generate the best results.\u00a0<\/strong>When we make asset allocation decisions, we do so on the basis of long-term growth assumptions rather than short-term market fads. As such, there is often a huge volume of work that goes into a decision to leave things as they are.<\/p>\n On that note, we are in the process of producing a briefing note for clients to explain more about the decision making process behind our portfolios and some of the rationale for recent moves (or non-moves as the case may be). I look forward to sharing that with you in the coming weeks.<\/p>\n","protected":false},"excerpt":{"rendered":" You will have to excuse the somewhat more technical nature of today’s post, however, we seem to be at a bit of an inflection point in markets with a huge volume of change going on all at once. During times like these, our ‘inner chimp’ has the capacity to take over and override our more… Read more »<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3300","post","type-post","status-publish","format-standard","hentry","category-uncategorised","wp-sticky"],"_links":{"self":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts\/3300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=3300"}],"version-history":[{"count":2,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts\/3300\/revisions"}],"predecessor-version":[{"id":3302,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts\/3300\/revisions\/3302"}],"wp:attachment":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=3300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=3300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=3300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![](\"https:\/\/dim.mcusercontent.com\/cs\/24accb29c338dd8d5efd02852\/images\/e0f67030-a239-fc91-cb4b-a0600d369fd6.jpeg?w=564&dpr=2\")
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