Budget Come. Budget Go.
10 December 2025
To all Financial Friends
Budget came (2 weeks ago) budget went, and with a big sigh of relief. Whilst the increasing tax burden on all of us will rumble on, the biggest relief is that Santa and all his gifts have not been upturned and lost in outer space. The biggest budget risk was not the threat of increased taxes, although this has materialised as expected. The greatest underlying risk was that the fixed interest (bond market) in the UK might have imploded.
Why This Matters
For years, financial advice, the security of people's pension funds, investment and savings has rested on the foundation of UK Gilts and Global Government Bonds (fixed-interest debt) rising in value, when equities (shares) fall. Negative correlation in other words. So Gilts and Bonds have been a place of perceived safety. If the 'safety net' fails because of investors loss of faith in the outcome of the budget the equivalent of financial chaos could have been let loose. The value of traditional bedrock diversification between Gilts and Equities would be lost. Financial security for so many scattered to the wind.
So Where Now for Your Money?
Investors should not feel that the Gilt and bond markets are "safe" from fresh volatility as yet. Confidence could reverse quickly, as market analysts frequently emphasise. So, as I have put forward in previous commentaries, specific assets, reflecting current economic conditions, give me greater sleep at night. Even if the bond market goes through upheaval there is still deemed to be a level of risk reduction remaining in diversification. Investing in specific assets is seen as higher risk as your chosen assets could fall if you read the outlook wrongly.
Why Specific Assets?
Because my perception is that some such assets have a more confident supply of contractual and economic forces supplying ongoing cash supporting them in these very uncertain times. For reasons given in earlier commentaries (see website 'Robs Commentaries') I express a degree of confidence in the following assets. Gold and silver. Global Infrastructure funds. Defence (and related) sector holdings. Technology (AI focused) but be aware of the fear of a 'profit bubble bursting' in this sector. Also, consumer stocks (those providing and selling the things we have to buy just to live!)
So yes, I have been 60 years in this world of financial uncertainties. Often seeing two steps ahead sensing where markets might go, but nobody on earth can tell you with certainty. Helping you be 'aware' and leading you towards making your own informed decisions is always the aim. As a subscriber always feel to hit the 'Hotline to Harris' calendar button www.calendly.com/yourfinancialfriend to make time to talk things through for more information and guidance.
The Good News
Put ten economists in the room forecasting the future and you will get ten different predictions. But here is the good thing right now. All ten are likely to see falling inflation and falling interest rates in 2026! These events could see prices rising at a slower rate, and lower costs of borrowing for businesses. If fulfilled, then growth in the economy would be supported. It is precisely economic growth in the UK economy (and nothing less) that will preserve all of our security going forward. Growth will support the confidence of investors in the UK and support the Bond market. Part the Red Sea! Make a way where there seems to be no way!
The Even Better News
As reflected in many of my past commentaries, many students, have made excellent returns including with specific assets in the year to date. Right now (even though there has been a wobble in the markets) with the exception of Index Linked Gilts, every asset held by most students have made profit. These include Global Technology +21.3%, Natural Resources +23.1%, Gold and Silver +104.8% (yes, just ridiculous but true - £1000 invested turned into £2,048 in just 12 months!), Infrastructure fund a modest +7%, Tracking the FTSE100 Index +21.3% and Defence Stocks fund +76.44%.
Whilst the above are factual returns (29/11/25) a well-diversified student using a mixed asset fund, gained just +2.3%. Always remember your investments can fall as well as rise in value and past performance is absolutely no guide as to future performance.
A Cheery Note
Please take my very best wishes for the Christmas season and watch out for the Santa Bounce! The Santa Rally in the markets (the last 5 trading days of December + first two trading days of January has produced a positive return close to 79% over many years from 1950 onwards. Happy Christmas!
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.
