The last financial crash in 2008 gave the global economy a brutal beating, governments felt compelled to take measures to provide monetary stimulus to the financial markets.
Over the last 14 months we have expressed our concerns, warning investors that this twin increase in liquidity had artificially inflated asset prices, meaning gains made might dissipate. Our message via our blogs, seminars or by direct contact was not always well received (hence my title, don’t shoot the messenger).
Both low interest rates and QE raised liquidity and provided support for the financial markets, leading to increased investor confidence. These support measures are now over, and money is now being sucked out of the financial markets.
This reverse liquidity is now creating considerable downward pressure on stock markets worldwide. Markets are either headed for a fairly significant correction or worse.
The financial turmoil is causing concern amongst investors, in addition investors are also face the possibility of large currency swings, particularly in the UK and EU.
If you are relying on your investments or pensions to sustain you in the years ahead then please be aware that the investment decisions you make over the next year and a half are going to be crucial for your financial well-being.
The old asset allocations of 60% Equities and 40% bonds that are prevalent in most pension funds will not protect you. Today’s markets call for a far more diversified mix of investments and need to include “disrupters” and “new technologies”.
Don’t make the mistake of holding large cash deposits particularly if they are in Sterling.
Doing nothing and or making the wrong investment decisions will result in your wealth evaporating.
Remember also, that every large stock market correction is normally followed by an even larger upswing, in order to participate in the upswing fully you need to have a fully diversified portfolio that is future oriented.
Our portfolio selections tend to focus on fund managers with a good track record or where there is a long term “value” strategy. Our “value” selections often underperform in the short term, this can cause investors to lose faith, as they often take just few moments to glance at the current price and say “that’s not doing very well is it” – if only they knew how much work goes into researching fund selections.
Can you make money in these turbulent times?
We received the good news today that one of our value selections has sold its largest holding at a vast profit, boosting its cash resources at this very opportune moment. Yet, this fund is still available at a bargain price and at a big discount. Naturally we are advising our clients to top up on this one!
If you have concerns, do contact us, to check your portfolio is fit for purpose!