”The four most dangerous words in investing are “This time its different” “(Sir John Templeton)As we enter the last quarter of 2019, September, historically the worst month for stocks bucked the trend as we saw all major markets produce a positive return – data being:
MSCI World +2.0% +15.7%
S&P 500 +1.7% +18.7%
FTSE +2.8% +10.1%
Nikkei +5.4% +9.1%
SSE +1.4% +17.4%
MSCI EM +2.0% +7.6%
And whilst the USD remains steadily strong in 2019, movements against the Greenback were as follows
GBP -1.0% +4.7%
EUR +1.0% +5.1%
JPY +1.9% -1.3%
AUD -0.1% +4.5%
CNY -0.1% +3.9%
It seems every day we wake up, the news stories we hear are like the proverbial one legged duck – swimming round in circles. US / China Trade War and Brexit occupying much of our news feeds but with no clarity on progress, let alone solutions or an end.
This creates Geopolitical risk and allows markets to be volatile as buying and selling is driven by emotion and is reactive.
Ironically though it is those “Same Same” situations which are key to Long term successful investing. Most of us today will go about a routine very similar to what we did yesterday and are likely to do the same again tomorrow and the next day.
What do we do every day? – Brush our teeth (Colgate +24% YTD) , Wash with Dove Shampoo (Unilver +19.0%), Logon on to our computer (Microsoft +37% YTD), Eat something (Nestle +33% YTD), Drink something (Pepsico +26% YTD)…I think you get the idea and those companies who are the leaders in these areas benefit from the inherent growth story that more people will be using their products today than they did yesterday. We are all living longer. People from Developing countries are consuming more. The world’s population increases daily by around 200,000 people. most of whom will eat, drink, wash and work..therin lies the growth and where the long term money should be
Long term though, is not what everyone looks for and that is why it is key to bespoke your portfolio. As we enter the last quarter of 2019, historically this has been the most fruitful for investors by some way. However that cycle was turned on its head last year when the S&P fell a whopping 14%. If you have one year to go to retirement and your share portfolio falls by 14% in a quarter, no matter how many of the great stocks mentioned before you own, it takes time to recover those losses and time may not be something you have.
This is why having Alternatives is also important. Owning assets without correlation to the stock market and / or produce fixed income protect you from similar scenarios such as what we saw this time last year.
So make sure that your portfolio is set up to suit your requirements. As I have said many times, no one has a crystal ball and can predict the future. The amount of times I hear comments such as “They say another crash is coming ” – These statements have no substance. For every analyst who is bullish on the markets, you will also find someone who is bearish…so someone is right and someone is wrong. So you have to manage your position so you are hedged enough but not so much so that your growth is impeded…not an easy balancing act and an area we can help with
Sometimes it seems like we are in a forever changing world, yet sometimes it seems that we are living in GroundHog Day. Either way when it comes to investing never forget the words of the great Peter Lynch…”Know what you own and know why you own it”….