Q3 Investment Update – Calm before the storm?

Quarter 3 moved sideways, upways, downways and every which way in response to hints of lower UK interest rates, Trump’s continued incompetence in dealing with the Chinese, the European Central Bank reducing interest rates/reintroducing quantitative easing, falling UK PMI indicators and signs of a general slowdown. The Chicago Volatility Index (VIX) moved to double digits numbers again. The UK in particular faces problems as we move into the fifth consecutive month of falling industrial output and slowing growth in the service sector.

Despite concerns from several quarters about brewing problems in the government and corporate bond sectors for well over a year now, the client invested in fixed interest over the last 12 months would have been sitting on larger gains than the equity investor over the same period. This proves that even the experts are continuing to struggle to call the future and it is a wonder that more haven’t given up in utter frustration (significantly above average salaries in the fund management sector might have something to do with it).

There really is no asset class that looks predictable now but we know that cash is a very bad idea over the long-term. In fact we know of one fund manager who moved his own money (not his clients) very rationally into cash in 2011. Each year ends with him wishing he had invested in January and each new year starts with him being unable to invest as his buying price point is so much higher than when he exited the markets. He must be begging the fates for a market correction by now, let’s hope he gets one before his own plan runs out.

So again this quarter, the record is stuck on; Track 1 – Invest for the Long-Term by Passives and the HoldTight.

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