Comment and opinion for retail investors in the UK
Last month I wrote that this was often the time of year for bumpy markets and I was not wrong for 2021.
Issues that are potential headwinds and which have blown up somewhat more briskly in the last few weeks include:
In response to feedback, I have written a new article in the ‘How to” series entitled ‘How to Find the ‘next best thing’ and make rational sell decisions (fund switching) (m)‘
It looks at the process of generating ideas for future or updated investments, probably at the sattelite holding level for many and how to make rational decisions about fund switching.
This is a big subject and maybe that’s why I have not addressed it before. The article is only intended to give you a starting point because I believe this is an aspect of investment management where some aptitude or experience is required. I say that because I think I have got slowly better at it over the years.
As always feedback and questions are welcome.
There be no Midweek Musings this week, but my October Watching Brief will be published very soon!
As Private Fraser used to tell Captain Mainwaring…
I read another piece from Noriel Roubini, the academic economist who shares Fraser’s positive oulook, within a few hours of a news item that explained how the UK government had to cover much larger interest payments due to a change in gilt yields. These 2 items fit together.
We are entering a hazardous time of year for investors, so an ‘accident black spot’ sign has just flashed, as we happily motor along with our portfolios running sweetly and the speedometer reading some 10% above the legal speed limit which seems fine given the conditions. The speed being our enthusiasm for risk!
According to Investopedia, the (ancient) Dow Jones Industrial Average has declined 0.8% on average in September months since 1956 and the S&P500 (more realistic a measure) has declined 0.5% on average over an unspecified period. This is said to be a global pattern, not just affecting US markets. In fact, the NASDAQ, established in 1971, has performed much the same.
In more recent years, September sell offs have been less significant but that might just be because trading is now more dependent on algorithmic decision making and less on human behaviour and the summer holiday season of the Northern Hemisphere!
Does that mean we should be selling equities and sitting on cash (or more cash for most of us)?
I would suggest that would introduce potential market timing errors, although banking profits, especially if you need a return from your assets to maintain your lifestyle or fund some purchases, must make sense.
With the global news media focusing on events in Afghanistan, financial matters have not been much in the headlines this week, but there have been relevant news items for investors thinking about their asset allocation decisions.
On the former geopolitical drama, I find it incredible that the UK ministers supposedly responsible for UK policy appear to have had no relevant intelligence. By that I mean from the military and also between their ears.
This week I will put under your nose a small selection of news snippets that I think might inform your portfolio reviews and trading decisions.