Dear Clients
I write this note in mid-January following sharp rises in most equity markets. Looking at these, short-term movements is almost irresistible. But short-term movements are just noise, they contain very little if any useful information. On any one trading day stocks move up around 52% of the time and down 48% of the time. The secret is long term investing.
We are back in the office and supporting our colleagues as they prepare tax returns in time for the 31 January deadline. Average inflation adjusted incomes are going to fall quite markedly; and for many this will be a brand-new experience. However, some businesses will continue to make money and the “wealth of the average consumer” statistics mask not just some very poor individuals, but also a slug of comfortably well off individuals.
Satis Wealth colleagues are nearly all in the office three days a week. I have enjoyed seeing colleagues and clients back in the office. We continue to offer Zoom (or Teams, or Skype etc) for the significant minority of clients who would rather not or cannot meet in our offices.
I am afraid there is more volatility to come. Defining new eras is impossible without hindsight but we are around that time. Very low interest rates, relentless globalisation, and stable geopolitics, and all that flows from these, have changed. This will lead to volatility, and some scary times. However as usual we believe the tortoise typically wins. There will again be winners as well as losers. Given our client bank and background, we will continue to “play the percentages”. We are looking for strong and steady to win the race rather than knocking the ball out of the park. This is nothing new, but I recently received a comment that interpreted our position as a conservative attitude (with a small c). I bristled at this – our clients hold between 50% and 100% in equities in their portfolios. The detail will depend on the detail of their situation. We are seeking to find mixtures and blends of assets and tax structures that have the best chance of giving clients a good investment experience which must include discussion about downsides and Plan Bs. That is not conservative – it is considered.
The Investment Committee met earlier this week. As usual the meeting had a full agenda. Two key decisions were made (well more than two, but two that are worth reporting in this note). The first was our conclusion that we would not alter our default property fund recommendation – my colleague Lee writes about this here. The second was to give us the facility to tweak our (your) exposure to Chinese listed shares. This is a technical point that is driven by a nervousness about having too much money in Chinese listed businesses.
I hope you enjoy the articles I send out. Let us all hope for a good 2023 and a swift victory in Ukraine.
Thank you
Ben Sherwood