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Investing is a Marathon Journey not a sprint ………………….

 

It was a huge weekend for Marathon running in the UK, with the London Marathon taking centre stage.

The similarities are simple to translate from marathon running to a long term investment process and journey.

Successful marathon running, like a successful financial plan, doesn’t just
‘happen’.  Both disciplines take a huge amount of time, considering the facts, building a clear map of the journey ahead.  With both marathon running and investing, there will be ups and downs so making adjustments and repositioning during times of concern are essential to delivering on the plan to travel the long and hopefully enjoyable journey…

In the financial planning space, the goals are generally to secure a solid financial base, delivering on the needs of the investor, regardless of the ‘bumps in the road ahead’ – delivering confidence to stay the course and for the investor’s financial ‘peace of mind’ – meeting their needs.

We use a variety of tech tools and lots of experience and knowledge in order to build ‘suitable’ investment solutions for our clients and customers, which make it effectively impossible for a DIY investor to produce even ‘similar’ results over the long term on a risk adjusted basis.

Financial Planning and Investment advice is a complex area that requires complex and knowledgeable oversight.  We trust what we do… we know what we do very well… although we don’t have a crystal ball…..

Our investment process can be basically understood from the attached link – https://gallery.mailchimp.com/03161d6ca4cecca6092a0798c/files/77360da9-3518-494a-855f-0b1e689888df/Best_Price_Brochure_updated_version_.pdf

Investment market volatility

The ‘bumps in the investment road’ can be more evidently identified to general retail investors when they look at investment changes and asset price falls.

The last 12 months, with a number of main index markets, help to express how the bumps in the road can develop into cliff edges on times …… this is what happens when investing in risk assets; Market risk unfolds.

Figure 1 – FTSE 100

Figure 2 – Dow Jones

Figure 3 – Emerging Markets Index

Global Investment Markets rally in 2019

You will have read about the Christmas crash, not only from ourselves but from general financial commentary no doubt.

Global Trade

Sentiment has improved dramatically following the interpretation of constructive trade discussions which have helped global ‘Risk’ Assets.

The Fed’s rate path, inflation control and of primary importance ‘Trade’ news – leading to sentiment views remain the focus of investors ….

Monetary policy is likely to remain accommodating for some time to come (interest rates remaining low).

Views and opinions in relation to investment market outcomes always vary widely…  I have recently heard a commentator’s view that a deep and hard recession is developing, driven by German and Euro sector banks…  No one can predict the future and market outcomes which is why a diversified, risk adjusted investment programme, tailored to meet the needs of the individual or entity investing is essential.

At Best Price FS our risk models do what they say on the tin – but it’s also essential that investors fully understand that when risk assets fall in value, our risk models become impacted, the exposure to ‘risk assets’ is a critical consideration.  (We often meet investors in DIY investment solutions who have no understanding or concept of asset allocation and risk outcomes – invariably they become our investment clients).  Most investors understand the behaviour of markets and can relate the volatility suffered to their own understanding and expectations but some struggle!

We very much feel that our ‘mission’ is to improve financial and investment understanding, which is why we bang the drum so regularly!

Investment Markets

Investment markets are driven by ‘fear and greed’ – two fundamental emotions which produces an outcome of market sentiment.

A balance of quality diversified assets constructed to produce a portfolio is therefore essential; buying without bias, basing selection on quantitative and qualitative research, which is why we value our ‘Independent Financial Adviser’ status so very much.

Reporting

Over 25% of companies in the S&P are set to report this week.

The investment rally has been a PE driven rally, rather than an earnings rally, with PEs in the USA trading at around historic averages of 16x, so the market is moving towards a neutral expectation on an historic basis.

This week’s reporting will therefore indicate what upside potential is possible as earnings improvement could produce a ‘reset’ or an increase to PEs.

Productivity is seen to be improving in the US, as stated by a number of economists, while inflation remains low, which can only be good for the economy.

Last week in the City: Sainsbury hits 30 year low.

You may have seen last week’s headline in relation to Sainsbury’s share price, following the competition regulator blocking the merger of Supermarkets – Sainsbury and Asda.

Click the link to read a summary of ‘last week in the city’ by Chief Investment Commentator, Garry White at Charles Stanley – https://www.charles-stanley.co.uk/group/cs-live/last-week-city-sainsbury-hits-30-year-low

We must point out that the content of this article does not provide ‘advice’.  Advice is always specific to the needs of the investor.

As always, if you have any questions or require ‘ADVICE’ simply get in touch.

Richard and team

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