Q3 2019 MARKET UPDATE

Investment & Wealth Advice




SUMMARY

John Butters, Chief Investment Officer

Global stock markets rose modestly in the third quarter of the year, ending September up about 20% for the year to date. Bonds have also had a good year, with UK government bonds up around 11%. With the rising tide lifting many boats, the performance of our clients’ portfolios has been fairly strong.

REMAINING WHOLLY IN CASH CAN RESULT IN MISSING OUT ON GAINS

On 1st November, the FT ran a story with the headline: “US stock market‘s new high baffles investors” – who have been worrying about global trade, Brexit, a slowdown in manufacturing, and so on all year.

I find it strange that anyone can be baffled by this. It would be baffling if investors could normally predict the markets, and suddenly that ability had disappeared. The reality is that nobody can predict the markets consistently, and if you stay in cash because something scary could happen, you might miss a big gain.

Both 2016 and 2017 saw strong equity returns against a backdrop of general pessimism, and 2019 has so far been a repeat performance. Missing out on gains hurts one’s finances every bit as much as losing money.

INVEST FOR THE LONG TERM

One reason why some have been fearful for markets this year is the potential for a loss of “confidence”. The idea is that people might be so upset by some event, such as a trade dispute or a Brexit delay, that they sell out of their portfolios, do less shopping or stop investing in their businesses.

I have disliked this idea since it came to prominence in 2010 thanks to the European crisis (“we have to have austerity so that markets do not lose confidence”). Proper forecasts are made on the basis of a rigorous model. “Confidence” is not a model but a fairytale, and at worst becomes nothing more than a placeholder for whatever prejudices an investor happens to hold.

It is all too easy to tell oneself that if one’s own fears are not allayed, markets will react badly. But markets do not care a jot for our personal fears. They do what they do, and their future is beyond our ability to divine.

What they reward is the wisdom of Socrates: know what you don’t know. Invest for the long term, take no more risk than you can handle and  ride out the waves.

WEATHERBYS & YOU

At Weatherbys Private bank, we offer investment advice.  When clients come to us looking to invest, we will occasionally recommend an active investment manager.  What we will always do is recommend to our client that they choose the solution which will keep costs down.  

For this reason, many clients find that a portfolio of tracker funds is the right option.  We help them create the right balance of tracker funds in their portfolio and then ensure that it doesn’t drift over time. And, true to the low cost philosophy, we don’t charge a penny for this service.

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LENDING

At Weatherbys, we take a personal approach to lending, creating tailored, flexible mortgages and bespoke lending solutions to meet your needs

DEPOSITS

At Weatherbys, we take a reassuringly conservative approach to managing our balance sheet going above and beyond industry standards to ensure your money is safe and secure.

INVESTMENT & WEALTH ADVICE

We go above and beyond to help you achieve the very best financial future.

Past performance is not a guide to future performance. The value of an investment and its income can both increase and decrease and you may not get back the full amount originally invested. The value of overseas investments will be influenced by the rate of exchange.