Monthly commentary

We’re are all doomed, Captain Truss

As Ms Truss gets started as Prime Minister, its seems that there is nothing but a gloomy few months to look forward to in Britain. Investors are certainly taking that view because I read that nearly £7 billion has been withdrawn from UK focused investment funds this year (Source: FT).

Of course, the withdrawals might be all by UK investors scared of markets (amateur investors always withdraw money when markets have fallen sharply, according to most research) but it is likely that some of that money has been re-allocated elsewhere by international investors. A recent international bank economic forecast had the UK as the most likely region of the world to suffer a recession.

To a degree, none of the above is evidence of anything concrete – it is just behavioural. However, the human psychological behaviour of market participants is, in my view, the main driver of market valuations.

Economics is only of relevance insofar as it puts some words and fairly naive theory around the living conditions (especially financial aspects) of us all and that might help predict our behaviour!

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……