January 2024
- Happy New Year I hope it has started well for you
- I cannot remember when a central banker has made it so clear about the path of interest rates as Jay Powell did a few weeks ago and the markets went for it big time some of our portfolios put on as much as 7% in a matter of weeks confirming what I said about being investors being out of the market at critical times
- The yield curve (a forecasting tool that predicts future interest rates) is predicting “higher rates for longer” and has been for some time but it seems the market has started to reject this idea but if inflation remain sticky the market may have this wrong
- The editor of Moneyweek confirmed this week global trade shrank by 2% this year due to globalisation stalling
- Whilst the US economy is stronger (although faltering now) economies in Europe and the UK are not, so there really should be more emphasis on interest rates falling there rather than the US
- Purchasing Managers indexes are down globally, and some say this is the most accurate way of forecasting a recession
- The escalation of conflict in the Red Sea is causing some alarm with investors
- Elections can affect investment Markets positively and negatively and there are elections this year in the US, UK Taiwan and Russia
- What did we get right last year
- Stayed away from direct investments in China
- Invested in Tech
- Didn’t sell off our Fixed Interest exposure
- What did we get wrong
- Underestimated the resilience of the US consumer
- Our portfolios are holding up well because: –
- Investing in underlying assets directly i.e., government gilts and high-quality corporate bonds
- We continue to insert structured products into our portfolios because by doing so introduces a certainty ingredient
- 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 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.
