Will the crisis start to recover??? For markets is this the bottom ??? Is it a buying opportunity???
These are the question we are asking at the office and we are discussing with many clients.
What are the experts saying?
They are stating that we have potential outcomes ranging from it could end shortly, grind on for years or even escalate further if someone makes a mistake.
The reality is of course that we do not know and it’s not as easy, as say the Financial crisis of 2008, when it was clear to see the problem and outcome in financial terms. In the pandemic it was reasonably fundamentally obvious we needed to just hold steady and it would fix itself.
Could this be the best time to invest?
I must say we are not sure and the decisions which will repair or further damage the financial situation as well as the crisis, are not mathematically based, or fundamentally grounded, but rather up to the decisions made by people.
So we are back to the old adage, there is never a good or bad time to invest, so investing while values are depressed makes sense even if they go further down from here. This is because you are in it for the medium to long term, not short term.
Should I move it all to cash?
People invested now in actively managed funds need not try to second guess markets, that’s what we pay the fund and portfolio managers for and having spoken to some very tired looking ones recently, they are earning their charges. So, our view is the people with spare money should talk to their advisers and the ones already invested should just stay the course unless they need some of their investment. If that’s the case talk to your adviser.
What’s the damage?
Reviewing the situation yesterday using real highly managed portfolios, invested at a balanced risk, we are over the year only marginally down. The high growth of the early part of the last rolling 12 months has been taken back meaning we are significantly down (around 11%) since December, half of this taking back of profits is due to the fixed interest bubble bursting on the back of increases in interest rates, and half due to the war and energy price increases. Both could unwind quickly, but our investment team think (depending on further Ukraine and Russian discussions) it’s more likely now that we get a slower recovery. Either way we see recovery as likely, so now looks like if not the best time, a good time to consider a top up if you have spare capital. But remember if something prompts an escalation of the crisis, or some other unexpected problem comes along, already depressed markets might react very badly.
So that’s our view but we have asked for and share comments from a fund management team on their thoughts.
Waverton Investments commented:
”Against the backdrop of a geopolitical crisis it is more important than ever to remain disciplined in investment approach, ensuring that the thesis behind each holding remains intact and overall positioning appropriate. Waverton’s selection criteria should continue to serve us relatively well, given the high-quality nature of the companies we own.
Our equity research team is currently reviewing additional names for potential addition to our global portfolio. As we have been articulating for some time, we will continue to use volatility in markets to gain incremental exposure to specific value/cyclical areas where we still feel under-represented and/or to increase current holdings that appear oversold given the strength of long-term fundamentals.”
So for now that’s it for this week, but please, if you need us just shout we are as always prioritising our existing clients and we have increased staff to make sure that our service is prompt and timely.
Stay safe and lets all think at this time how we can support our friends in Ukraine with our thoughts and actions. We hope for some sense to come from the discussions today and cross everything for some direction out of this crisis to emerge.
Managing Director Wealthline and Brooks Wealth.