Markets
Watching Brief – July 2022
Pottering About
I write this in a very warm room, with outside temperatures around 30 degrees. Summer has arrived in Lithuania! Gardens are running away with growth after a wet Spring and the swimming lakes are busy at weekends.
Selling in May ahead of going away would not however have been sensible this year – a new cliché for selling in October would have been a useful guide!
In my experience, stock markets usually become listless in the months of July and August and barring new major global events that impact on economics and finance – which are more likely to be negative than positve anyway – it is very hard to take tactical decisions with any confidence.
In essence, I think of these months as a ‘do nothing’ period (apart from keeping a weather eye open). In fact, when building my client review calendar as an IFA, I scheduled hardly any meetings in these months, only partly because I myself wanted to take a holiday, of course, and I can never recall anyone objecting!
Clearly when markets have headed down for several months and the underlying conditions are not offering any obvious reasons to expect a return to a bull market, selling quality investments would only serve to supply bargains to others. This is one of those times when a shrewd investor lives on their reserved deposit funds or other income sources and leaves their portfolio well alone. But human psychology is not so easily managed……
Mideweek musings – Dotcom Crash 2 (the sequel)?
As global stock markets head South again on gloomy news about inflation, stagflation, growth, shortages and so on, I am prompted to revisit my suggestion some time ago that this cyclical reversal might end up like the long and painful decline (up to 60% in some markets) that followed the bursting of the ‘dotcom’ bubble.
So what happened 22 years ago?
Midweek Musings – time and time again
I present below some data comparing investment segments to which most investors would think about allocating a moderate slug of their diversified portfolios. The percentages are capital returns on the index with income re-invested (Source: MSCI)
Watching Brief – June 2022
Pottering About
Where are we now?
During the course of May, I wrote that there were strong signs of a market capitulation which might be the ‘low’ in the downturn that we now know started in late Autumn 2021. If so, this would have been a correction deep enough to be called such, but relatively short. I suggested that the most recent market corrections we have seen have all been quite short for reasons to do with the amount of automated market transactions, I suspect.
Since then, a period of about 2 weeks, markets have moved up and in fact last week was the first one in a long while when the US main markets closed up on the week.
Watching Brief – May 2022
Pottering About
As usual when starting this monthly commentary, I looked back to see what I wrote a year ago and in fact it was absolutely relevant on this occasion. I was prognosticating the potential impact of central banks raising interest rates to tame inflation. I took the general line that such actions might not be that effective based on prevailing conditions but that if the central bankers decided that the way to make rate rises more effective in slowing inflation was to ramp up rate rises, then they might crash the global growth completely.
I just read a piece by ‘Dr Doom’ , Nouriel Roubini, more or less saying that stagflation (inflation and no growth) was now a dead cert. He was able to add some extra negatives that I did not know about a year ago: the Russian invasion of Ukraine and the very aggressive lockdowns in China as the government there tries to keep the country free of a major outbreak of coronavirus.
