A Conversation
26 September 2025
To all Financial Friends
Major stock markets are at all-time highs. But why? My inquisitive mind asks why - yours too perhaps? Looking at the spread of 11 specific assets held by many of our students the average return over just the last three months to date has been a comfortable 8.36%. This is if you held your investments spread equally over all 11 assets commonly held by our students. The three leaders of the pack performed as follows: Natural Resources +17.6%, Gold/Silver +39.2%, Global Technology +22.8%. Outside of the 11 main holdings many have their own particular asset choices as it should be.
This commentary is more of a discussion, a conversation together. A chance to become aware and question. The world around for many, feels uneasy and uncertain. This is a time to make sure our money is in the right place. Prevention is better than cure? We never want it to be too late. We never want to hear ourselves saying 'if only I had known that!' Financial Friends so often hear me say there are always opportunities in the market, and there are. Through awareness - being aware, by looking 2 steps ahead of the market we seek to protect, provide and ensure the enjoyment of a financially secure life.
Let's Consider
Here in the UK most people do not feel good about our economy. Food prices and the cost of living feel to be rocketing up. Disposable income is falling. The likelihood of tax rises in the next budget is a concern. An economy moving from welfare to war footing. Political uncertainty. With inflation concerns, the Bank of England holds interest rates. Yet the FTSE 100 hits an all-time high level.
Why?
A major reason why, is that the FTSE 100 companies, domiciled in the UK, generate some 70-75% of their revenues from overseas. A large percentage of this revenue is in US dollars. When sterling falls against the dollar (as is recently the case) the profit created by the currency exchange boosts the capital value of the company. This increased value is reflected in the rise of the FTSE 100 Index.
What happens in the US economy affects the whole world economy, big time. So why is the Dow Jones Index (like our FTSE100 Index) at an all-time high as well? Perhaps because of Trump tariffs and the uncertainty caused, investors have moved funds into the larger (perceived safer) companies represented by the Dow Jones 30 companies in the Index. This alone would push up the index. The expectation of further interest cuts (-0.2 5% last week) and the optimism for growth in technology and AI are factors amongst many others. Trumps tariffs have not (as yet anyway) upset the global economy as was feared.
Mind the Gap?
A return of 8.36% in just 3 months, seen from the spread of our students holdings, is a real return against inflation standing at 3.8% pa currently. Seeing major world indexes at all-time highs is profitable for many and for the greater good. Long may it last! But, I hear you ask, "will it?".
Almost everyone I speak with tells me they just do not listen to the news! They can't stand it. I have to listen and watch, because of the need to be aware of what is happening that affects money, the risks and the opportunities affecting investors, that arise as a result of world events.
Focussing on Ukraine/Russia and Israel/Hamas wars always in the news, means the seven other war zones raging in the world are forgotten. Europe is threatened by the collaboration of Russia, China, North Korea and Iran. The nations of the global economy are buried in debt, inflation is not defeated. A global average temperature of above 1.5 C challenges whether we can cope with heatwaves, floods, droughts and sea level rise. Every nation fights for its own self-interest when we all need to pull together.
Denial?
So is the investing world ignoring (like many of us) the issues too big for us to face? This would be the normal human condition, denial is a natural human defense. We focus on immediate, tangible and often short-term events. Optimism flying in the face of reality - until it doesn't!
In the markets this focusses on short term opportunities which creates asset bubbles. Financial Friends have, and are experiencing this, by becoming profit takers. Gold making over 61% in just 12 months. Defence stock producing 28% in 6 months and Infrastructure funds 11.4% in just 3 months are recent real-life examples.
As we have always said, whatever occurs in the world around us, there are always opportunities for investors to profit. Money always has to go somewhere, and supply and demand mean that where the money goes what it invests in rises in value. Let’s stay looking 2 steps ahead and making informed decisions through information and guidance offered from the background of many years of experience.
Please stand by for a further commentary (very shortly) on the fixed interest bond market. The foundations of normal negative correlation between the equity and fixed interest market could be set for disruption (Liz Truss style). We will discuss the options of holding a wide diversity of assets or the selection of specific assets. Also, for those interested to research defense and consumer staple stocks, more information is coming.
PLEASE NOTE: A financial or economic commentary like these, are written to explain, interpret or give an opinion on economic events and markets to help readers understand what’s happening and why it matters. Designed to help you make informed decisions of your own by making you aware of opportunities, risks and potential rewards in the market.
