When I read that the Italian government ‘backtracks on windfall tax after bank shares slide’ (FT), or watch a video explaining how the leadership of the Chinese Communist Party is embarking on a propaganda campaign to boost the perception of Chinese companies and push share prices up, I add that to my collection of evidence that there is no longer such a thing as real democracy. Not that anyone ever said there was in China anyway!
Markets
Midweek Musings – time is your friend
To adapt the words from Sergeant Pepper – ‘it was 46 years ago today’ – that your then naive but optimistic scribe started work for the Halifax Building Society. Over the subsequent nearly half a century in what might loosely be called a career I progessed from cashier clerk/managment trainee through quite a few iterations of finance industry jobs to end up as your semi-retired keyboard warrior writing a blog on the internet on a warm sunny day in Lithuania, a country I suspect all of us know more about than we did in 1976!
Don’t panic – I am not going to write thousands of words about nostalgic but to you boring biographical stuff. I would only say that I have made mistakes, learned a lot and had a few successes, and that all applies to my adventures as an investor myself!
I refer to this quite large block of time so as to remind readers that when getting all stressed about your investment portfolio performance, if you ever do, you need to remember that most of us are now invested for life and hopefully that means we are going to be in the market for at least a decade or more.
That being the case, we need to always remember that markets are cyclical and we should not get overly focused on the short term. I can now say that with absolute confidence after all that water under the bridge!
Watching Brief – July 2023
Pottering About
Half time scores
I find it useful to have a look at market returns around the globe halfway through the year and so present below some approximate data (Source: Yahoo Finance).
| INDEX | Year to Date Change (local currency) |
| FTSE 100 | No change |
| FTSE250 | (-5%) |
| S&P500 | +1% |
| Bitcoin | +73% |
| Nikkei225 | +28% |
| Hang Seng | (-10%) |
| DAX/CAC (averaged) | +13% |
| Gold futures | +10% |
| £/USD | +5% |
| £/JPY | +16% |
Of course, all data taken over a short discrete time period must be viewed with caution, especially noting the significance to percentage returns of where the starting point happened to be – Bitcoin was not exactly flourishing in late 2022, just to pick one example.
Midweek Musings – pessimism prevails for the moment
Midweek Musings – Spanish Inquisition?
Friday is not mid-week, I know. Apologies if you were wondering why there was no post on Wednesday.
I saw this week a headline in the FT that ran: Investors Should Expect the Unexpected. How absurd.
Most readers will know why nobody expects the Spanish Inquisition. If not, ask Google, Bing or ChatGPT. It’s the meme from 1970’s BBC TV that you want, not 15th century religious history.
However in spite of the FT’s urging, investors cannot expect the unexpected, because if they did, it would have become the expected. You see the difficulty?
I can’t know what the FT wrote about this because I don’t pay their exorbitant subscription, so this is a bit of a rant (with a purpose).
Crystal ball gazing
The better point to make is that the next direction of the market is not often indicated by the easily available headline ‘facts’ or even the current pricing trend.
The next inflection in a given asset market is quite often not at all unexpected to someone who carefully reads relevant news and economic, financial and trading data. Such a person will also have to understand their personal psychological biases and how to resist them.
Furthermore, taking decisions in anticipation of what is going to be called later the ‘unexpected’ , but was in fact something entirely predictable (like say the bursting of the dot com bubble) is difficult because an investor who is sufficiently thorough will always be ahead of the market and will see short term underperformance or even losses (if the foresight prompts purchases rather than sales).
Knowing what is going to happen is not so difficult, but judging the timing is more tricky.
According to the Bible, it took 40 years for the legendary Jewish prophet Jeremiah to be proved right big time. In the meantime he was pretty unpopular. I have no wish to be thrown down a well nor for my readers to wait 40 years to see that I was right all along. I do think however that one can see what the market does not want to acknowldege maybe 6 months to 2 years ahead.
Give us another example, I can hear you thinking!
I already gave one: dotcom stocks in 1999 – I had none in client portfolios built on my recommendations. Another: the collapse of gilt and fixed income prices in early 2022. For now: problems coming out of China and that region.
Those are all worries. On the plus side: current undervaluation of UK shares outside the FTSE 100.
I am not obliged to give FCA risk warnings, being a mere blogger, so will end with a biblical one instead: Beware of false prophets!
I don’t really know the future, of course. I just make an educated assessment and I am wrong at times.
Midweek Musings – Sell in May?
An aside
A quick introductory comment: Some indirect feedback from subscribers makes me think that I have been making these midweek updates too long!
I am going to make them shorter for now although once a month I will write a ‘longer read’ two or three part market commentary and technical explainer.
Sell in May and go away?
All readers know this old stock exchange maxim, I am sure. I have written about it in the past and I think, without doing any actual new research, that over a very long period, it would have proved useful more often than not.
Let’s take a look at 2023 to date by checking returns on the major equity asset markets. I am ignoring fixed income as I don’t think the mantra was intended for that market!