What’s the saying? ‘Close, but no cigar’. That’s how it was in October as all but two of the markets we cover rose in the month. Brazil’s market did manage to stagger up by just 14 points, meaning it was unchanged in percentage terms, but the Russian stock market let the side down, falling back by 1% in October.
While the stock markets were having a good month, the Brexit talks were having – another – stagnant month. Having been to Florence in late September, Mrs May then went and pressed the flesh in Brussels, but the warm words soon gave way to more bickering about the UK’s divorce bill. With the date for the UK’s departure from the EU another month closer, talks about a post-EU trade deal are nowhere near starting. Continue reading →
Well, we’re still here. Despite the seemingly best efforts of the leaders of the United States and North Korea – the world is still turning. But September was a month of ‘another day, another North Korean rocket flying over Japan’ and it ended with Kim Jong-un threatening to explode a nuclear bomb over the Pacific. Small wonder that South Korea is creating a special military unit with only one aim, which does not bode well for Kim. Continue reading →
July got off to the best possible start when Janet Yellen, Chair of the US Federal Reserve, announced that there would be no more financial crises “in our lifetime.” Speaking on a trip to London, she said that the reforms of the banking system since the 2007 to 2009 crash had “minimised the risk of a similar disaster happening again.” Phew, that’s alright then. And if you’re reading this commentary, Ms Yellen, just skip over the bit about Italy… Continue reading →
Well, apart from the chaotic General Election in the UK. Oh – and the decisive win for Emmanuel Macron in the French parliamentary elections. And the start of the Brexit negotiations. And Italy was forced to bail out two more banks. President Trump pulled out of the Paris climate change agreement – and in Brazil, President Michel Temer was accused of corruption – the first sitting President in Latin America’s largest country to face criminal charges. Anything else? Just another global ransomware attack… Continue reading →
It’s a tricky time just now on the financial markets, and what you are seeing in the news is not necessarily being played out in the model portfolios or the strategy funds. I think one of the main
reasons for this is that the US market is probably the only area that is moving forwards. The fixed income sector has had a good run since the summer, but even this is down over the last couple of months. In all fairness it should be, because some of the fixed income funds in our portfolios were up around 12% earlier this year. Fixed income should not behave like this.
Normally during the summer months not a lot happens on the financial markets. But what a few months we have had. And it all seemed to have started just after the UK referendum result at the end of June, as I am sure you will have noticed. I have had this discussion with several clients already, and I will reiterate it, I am fairly convinced that the global financial markets have not reacted the way they have just because the UK has decided to leave the EU. There is more going on than just this. Although, as we are now seeing there are several companies and bodies talking completely differently about the UK’s impending departure of the EU in a more positive perspective. And this will have helped the financial markets, certainly here in the UK and in Europe.
I attended an investment conference recently hosted by fund house Neptune. The theme being technology, or rather disruptive technology, and how investors can profit from this revolution in all areas. The presenter started off by asking did we think that by 2030 all new cars would be electric. A few hands in the room went up out of about 30 delegates. He then went on to state henry Ford’s famous quote at the start of the 20th Century ‘if I’d have asked people what they wanted, they would have said a faster horse’ you know the one. But then he told us to google a picture of 5th Avenue in New York in 1900, and then again in 1910 and see the difference. If you do it, and I recommend that you do, you will see in 1900 everyone either walking or being driven in a horse-drawn carriage. Now fast forward just 10 years, and you cannot move for cars, and not a horse in sight.
As we approach the end of the 1st quarter of 2016 the mayhem that was with us at the start of January and early February has started to ease a little. Are we clear of the volatility in the financial markets? I am not sure that we are to be honest. I think markets will be quite volatile for a while yet. But really the question should be – is there cause to be worried. As I have stated before there are various differences of opinion from the doom & gloom people who believe the world is going to end, to people that tell us the global economy is not in that bad shape.
I have attended several investment house presentations over the last few months, hearing both presenters and fund managers frequently state that all the current volatility in the financial markets is somewhat overdone. However, I do accept that it is still worrying. Is the world economy about to enter a deep global recession, which in turn will drag equity values down further or not?
We have to take into consideration the alternative safety of cash, against the longer-term certainty that cash will never help us meet our lifestyle goals, for two reasons:
cash is virtually at zero basis points, almost everywhere in the developed world; and
only riskier assets can offer the possibility of investment returns sufficient for us to meet our own personal targets.
The first 8 days of trading in the financial markets have once again been dominated by scare stories, which are prompted by a large decline in mainland China shares over this 8-day period. The Chinese stock market actually suspended trading in shares on the 4th January because things got so bad. This level of volatility has spread across to almost every other equity market. You would be forgiven for asking have we not been here before. Simple because this is virtually a mirror image of what happened last August.
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