This month’s missive is relatively short as it is the time of year to be jolly and there is nothing going on in the markets that would create that emotion. I will be glad to see the back of 2018 as I think shambolic is probably an apt description of the kind of year it has been.
When you consider what we have had to endure from our elected representatives it is a surprise markets haven’t fallen further. In the UK we have had nothing but Brexit until we are all sick to the back teeth of it, with businesses simply wanting to know what the future holds for them after 29 March. We are crying out for strong leadership but this seems to be in short supply on either side of the political divide.
In the US we have President Trump and his trade wars which are soon going to move from rhetoric to reality unless a deal with China can be negotiated. Virtually every member of his Cabinet has resigned in the last twelve months, not so different to the UK. No need to oil the hinges on the White House and Downing Street doors!
The US stockmarket fell 3% on Christmas Eve and rose by 5% on Boxing Day and is evidence of the role computers are playing in moving markets. In the good old days where human decision making moved share prices, Christmas was a period where next to nothing happened, however when you design an algorithm that will react to certain market movements it doesn’t care if it is Christmas Eve or Hogmanay.
Ned Davis Research are suggesting this volatility could continue for another few months. However, and this is where the Christmas cheer kicks in, they anticipate we will see a recovery around March/April time with the remainder of 2019 being positive. Now I do not know if they will be correct. Who does? We may see recovery in the next few days or it could be later than April. However, periods such as this do not last forever and trying to guess (as that’s what it is) when to come out and go back in is a mug’s game, especially when markets are moving as rapidly in both directions as they are at present.
No – a good New Year’s resolution would be to ignore what is happening in the markets. Your valuations when you get them are only showing what you would receive if you were to sell up. Given most of you will be invested for the rest of your life these quarterly statements are snapshots but somewhat irrelevant (and always out of date by the time you receive them) and therefore making decisions on the strength of them is unlikely to be wise.
So, roll on the end of 2018 and I wish you all a very happy and, more importantly, healthy 2019.