"Those who have knowledge don't predict, those who predict don't have knowledge" (Lao Tzu)Its half time in 2018, and after a two month break, the monthly market update is back. The reason for the hiatus was that I have now moved from Offshore Investment Brokers to Tenzing Pacific www.tpim.co.
So the raw data for June / YTD is:
Dow Jones -0.6% -1.8%
Nasdaq +0.9% +8.8%
FTSE -0.5% -0.7%
Nikkei +0.5% -2.0%
SSE -8.0% -13.9%
Dax -2.4% -4.7%
And on the currencies, the following versus the USD
GBP -0.6% -0.6%
EUR +0.1% -2.6%
JPY +1.7% +2.0%
AUD -2.2% -5.6%
CNY -3.4% -1.8%
So as the red shows, the markets have ben a pretty tough place to be so far in 2018. Unlike the preceding couple of years where everyone should have been making double digit returns without too much effort, its when market conditions are more difficult that the professionals come to the fore.
One of the most glaring figures is the fall in China'a markets , down nearly 14%. The tariffs being imposed by the US in the so called "trade war" have been a factor here. This has caused the Chinese to devalue their currency in a bid to lessen the impact on these higher costs for overseas buyers.
But of course there are still many opportunities in China, a vast market in a country which is still experiencing tremendous growth. To pick one of my favourite funds in this space, FMG, their Year to Date performance has been +1.8%. Whilst this may not sound overly exciting versus a market decline as mentioned you'd take this.
This is not necessarily about the active versus passive approach, which I have spoke about before. Both methods of investing have their pros and cons, although even if you prefer using lower cost passive vehicles, these still need to be correctly managed. Fund managers can go short, go into cash (FMG is 36% cash at the moment which no doubt protected itself from the Chinese market decline) and use their skills, access to research and information and experience to provide good returns for their investors.
Another example is Lindsell Train who you will have heard me speak about before. Their UK equity Fund (which buys FTSE100 shares) is up just under 11% this year, the FTSE is down 0.7%.
The research element is vital as professional fund and wealth managers do not try to predict the future, they make decisions based on information. I am sure we have all been watching the world cup and having the occasional flutter, if you are like me, losing more bets than winning.
This is because the world cup is unpredictable. Who'd have thought we would have lost the champions at the Group stage, first time Germany have gone this early since 1938...
My new employers Tenzing Pacific are very heavily invested in research and offer a Managed Account Service and I will be assisting their committee with asset selection.
Of course, regardless of the research and information you have , this does not guarantee you success and profits, but as long as it is used and interpreted properly, it does give you a better chance..
As always please feel free to get in touch, phone numbers the same, new email address firstname.lastname@example.org