“Something Unexpected May Be Imminent”....CNBC Headline
For publication in The Scotsman
Have you noticed every May we're told by "money experts" the wisest thing to do is sell our Stockmarket investments and head for the hills? It was the same this year. All based on some economist umpteen years ago crunching numbers back to 1694. So as long as you sold in May, resisted the temptation to stick the lot on a horse at the St Leger on the 14th of September, and instead went back into shares, you're quids in.
Problem is, life's never that easy. Other economists with nothing better to do checking the last 14 years found holding on to your shares all the time is a better bet, while yet more argue it's a toss up. Never forget ... economists are folks who may know tomorrow why what they predicted yesterday didn't happen today.
In May 2 years ago I was in Ibiza and was interviewed on a Spanish Expat Radio Money Programme. You may recall the "certain" impending disasters of the time. The Euro was a dead duck, Spain was kaput as was Italy, Greece was so bad New Drachmas were being printed with Greek Government Ministers making plans to pack in their Tavernas. When I suggested things would turn out fine it didn't go down well. I did offer a substantial wager to the listeners at much better odds than a St Leger outsider but nobody took it up. So what happened next?
If you bought an All Share Index Tracker at the time you'd be up over 30%, and over the last 5 years of " guaranteed disasters" you'd be up 91% on a total return basis. Selling in May over the last 5 years was a losers game. I've found over my 41 years of studying form it's best to adopt an "each way bet " approach If you check the Investment form guide, following one particular type of steed, the Income Fund, you can win, no matter the course with an experienced jockey in the saddle ..
Even over the last 5 difficult years this winning formula has worked well. A stable of our favourite funds have beaten the Index by 15% to 30% continuing a run of success for over 30 years. And since the late '80s one Income fund jockey has stood out for consistency..... Neil Woodford of Invesco Perpetual, who has doubled his investors' money every 5 years or so. Now he's decided to ride his own horse ...and with his record must be worth an each way bet.
But isn't it too late now? Aren't we all too complacent? Recently a money manager in the US was asked these questions. His response? A list of 26 worries his clients currently have. 26 worries much the same as the 26 or more he listed in 2009, 2010, 2011, 2012, and 2013. As Neil recently reminded us.... when you've been round the course a few times you know how to overcome any hurdles.