April 2024
- It’s up, up, and away for investment markets even though Inflation and interest rates continue to dominate financial markets. This goes for US, European Markets and Japan all of which our portfolios have good exposure to. Jobs growth in the US is pushing back interest rate cuts and investment markets will not respond favourably.
- As reported by Katie Martin in the FT, the exceptionalism of the American Equity Market can be endorsed by Apple’s valuation being almost twice the size of the Dax, the German stock market index.
- The FT also reported in its obituary column the passing of Daniel Kahneman who was responsible for many things but most importantly proving how flawed we are when it comes to understanding risk. RIP Sir.
- Elections in the UK and the US are being hotly contested, normally an election has little or no effect on investment markets, but it may be different this time around as the Vix (a measure of volatility) shows a rising curve over the next 6 months.
- Sam Bankman-Fried (SBF) and another individual known as CZ are in big trouble. SBF has been sentenced to 25 years in prison and CZ is due to be sentenced next week. These two individuals were serious protagonists in the world of crypto currencies but their fall from grace has not dimmed the appetite for Bitcoin whose price made $73,000.00 dollars last week.
- China is doing its best to stimulate its economy which bodes for well for Europe but is flooding the US with cheap EV’s and the US is not pleased.
- The hard to follow fixed interest market is offering good opportunities for investors and this year has the potential to make up for some of the lost ground over the last two years.
- Due to the crisis in Gaza, oil prices are going through the roof.
- What are we getting right:
- Staying away from direct investments in China.
- Selling low and buying low.
- Getting into Japan early (at least a year ago the rest are only just catching up).
- Invested in Tech and staying with the US in general.
- Not selling off our Fixed Interest exposure and watching their value return.
- Watching out for cash accounts and short dated bonds ceasing to offer attractive levels of return and what to do when this happens.
- What did we get wrong:
- Investments in Infrastructure and we took too long to move away from Agriculture.
- Our portfolios are holding up well because:
- Investing in underlying assets directly i.e., government gilts and high-quality corporate bonds.
- We continue to look out for structured products to place in our portfolios because by doing so introduces a certainty ingredient. However, they are not offering the risk-free returns they were.
- Our portfolios use fixed interest and fixed interest investments suffer when interest rates are high and there is more supply – this affects their value negatively. It should be remembered however, with fixed interest you get your money back at maturity which is not the case with other investments, so it’s a matter of holding these investments until interest rates start to come down or the investment matures.
Please note that:
- This information in isolation is not financial advice.
- Past Performance of investments is not to be relied on and the value and the income from investments can go up as well as down.
- It is advisable to regularly review your investments.
