Dust, Noise and Focus


16/12/2019 7:54:32 PM // Written by Tom Rogerson

Dust, Noise and Focus

As the dust has settled over the weekend, the aftereffects of Friday’s election result have been, and will continue to be analysed, explained and predicted by brokers, papers and other financial “experts” explaining how you can profit from the outcome. New information is reflected in market prices almost immediately, so the only people cashing in are the pundits and salespeople.

A Tory majority will either give you feelings of relief; that we are unlikely to see higher taxes for businesses and high earners and a generally socialist agenda; or disappointment as it would seem any change of remaining in the single market has now gone, with BoJo committed to “getting Brexit done”. Either way, the political logjam we have experienced in the UK for what seems like an eternity, is now unblocked.

Global politics seems to be increasingly unedifying, yet democracy has again delivered something positive.

The rise of day to day engagement on the tough issues we face as a nation can only be a good thing. We have the freedom to go to the ballot box and cast our vote for any candidate that we wish, and we have seen the turnout of those wishing to voice their opinion rising over the last 20 years. Each voter has each made their own individual contribution to the type of country they want to live in or call home, something which cannot be overlooked or taken for granted.

The future is as uncertain as ever, up next on the agenda is Trump’s impeachment and the US China trade war is an ongoing battle. We will have our own struggles navigating through 2020, negotiating trade deals with the EU and rest of the world, alongside improving our NHS, dealing with the challenges of an aging population et cetera et cetera. However, these things, and the impacts they might have on markets, are largely beyond our control. What we can control is how our portfolios are structured in order to best deal with these ‘known unknowns’ as well as any ‘unknown unknowns’ which will also inevitably come our way. The US Secretary for Defence Donald Rumsfeld once said:

“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

Investing well is simple, but not easy with all this going on around us. We remind of the foundations of our approach:
  • Markets are hard to beat; they are pretty efficient so capturing their returns using low cost-well-structured products is sensible;
  • Spreading exposure across equity markets, sectors and companies ensures we are well diversified against the risks we face;
  • Incorporating an allocation to high quality bonds is a good insurance policy for when times are tough in the equity markets; and
  • Discipline and patience are key to reaching your financial goals. Sit tight through the short-term falls and stick with your logical and well thought out philosophy and strategy over time.
Drown out the noise by turning up the Christmas songs, and enjoy the festive period ahead with your friends and loved ones.
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