“One cannot judge a performance in any given field (war, politics, medicine, investments) by the results, but by the costs of the alternative (i.e. if history played out in a different way).”
Nassim Nicholas Taleb – Fooled by Randomness.
For some, waking up to the large Tory majority this morning will be a relief, avoiding the higher taxes for both companies and the better off, and a deeply socialist agenda. Others will feel bitterly disappointed that the seemingly last chance to avoid leaving the EU has probably gone. Whatever your political hue, we are where we are. The political logjam has been unblocked. Many will simply feel relief that the interminable squabbling and stalemate in Westminster is over. Politics is increasingly an unedifying spectacle. Yet democracy – for all its critics – has again delivered something positive. We have seen a greater engagement in the tough issues we face as a nation, the freedom to go to the ballot box and cast our vote for any candidate that we wish and a high turnout of those wishing to voice their opinion. We have each made our own individual contribution to the type of country we want to live in. That is a privilege easily overlooked or taken for granted.
The future, as ever, is uncertain with heightened geopolitical tensions, Trump’s pending
impeachment and the ongoing US trade war with China. Here at home, the challenges of an ageing population, the NHS and social care, negotiating a trade deal with the EU in 2020 and the risks of a potential breakup of the Union are material. Yet these are things largely beyond our control. What we can control though is how our portfolios are structured to deal with whatever is thrown at them by the markets, in response to these ‘known unknowns’ and also any ‘unknown unknowns’ as Donald Rumsfeld, the US Secretary for Defence famously stated.
“A strategy should be judged in terms of its quality and prudence before its outcome is known, not after.”
Berkin & Swedroe – Your complete guide to factor-based investing.
Remember, investing well is simple, but not easy. We remind you of the core pillars of our
- markets work pretty well and are hard to beat, so capturing the market return on offer using lower-cost, well-structured products makes good sense;
- spreading equity exposure broadly across markets, sectors and companies to ensure the risks we face are well-diversified will always sit at the core of a successful long-term strategy;
- balancing out the risks of equities by owning high-quality bonds provides a good insurance policy against tough times in the equity markets;
- being patient (living through the short-term falls) and being disciplined (maintaining your philosophy and strategy over time) are fundamental to achieving the returns you need to fulfill your financial goals.
So, whatever happens in 2020 and beyond, try not to worry too much about markets and the uncertainty in the World. You can’t control how the markets behave but rest assured that your portfolio is as strong as it can be to deal with whatever the markets throw at it.
Try to forget about politics, the markets and your portfolio and enjoy the wonderful festive time ahead meeting up with loved ones, friends and simply being grateful that we live in a peaceful, free and affluent democracy. Many in the World are not so lucky.
Other notes and risk warnings
This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.
This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed.
It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.
Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.
Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.