Hope or Hesitation? Investing in an Uncertain World
3 June 2023
To all Financial Friends
Our commentary of 21st April 2023 cheerfully reported on short term gains made by students holding technology, gold, American and UK equities and infrastructure funds.
In just the last month to date, holders of technology and American equity funds have seen gains of 15.93% and 13.63% respectively. Other funds commonly held have seen reversals of between -0.38% and just over -5%
In April we reported on 5-year returns averaging 36% (£10,000 turned into £13,600) across the board of students common holdings. This assumes that investments were held for that 5-year period allocated equally between 9 funds that students commonly selected.
Whilst most of us hopefully slept peacefully in our beds. drama unfolded in the USA. Conflict arose between the political parties over the so called ‘debt ceiling’. More borrowing was needed to prevent defaults on payments of interest due on the national debt of the United States.
Failure to raise the ‘ceiling’, allowing payments due to be made, would have caused global economic crisis big time. A little like the economic debacle caused by the Liz Truss government but several mighty times worse.
Phew! The political battle was negotiated, and the Senate signed the deal to increase the nation’s debt and defaults on treasury stock (similar to our Gilts here) will not occur.
This event reflects upon a recent conversation with a new student of the Money Awareness Course. Deciding on the assets in which to invest, what was his outlook?
Negatively, the world faces big issues of the wrong kind. Pandemics, war, the rise of authoritarian governments, nuclear threat, and global warming. The threat of human extinction through the advance of artificial intelligence?
Positively, the financial world survives and prospers against all the odds and still will? Two world wars, the Great Depression, cold wars, political and economic upheavals, the credit crunch and of course Covid. Inflation? Not to mention all the crises we have forgotten about along the way!
Throwing caution to the wind, with a positive view, every penny would go into equities. However, If not wanting to go where angels might fear to tread, every penny would go into the Fixed Interest market – lending money to governments.
Our new investor/student went for a mix of infrastructure and gold funds. He liked the remarkable buoyancy of the FTSE100 Index in recent troublesome times so opted to invest there also.
Which side of the fence are you? Negative or positive? Students ‘preferred holdings’ might be considered as a thoughtful balance between the two? What do you think?
For reasons previously debated in past commentaries some students use infrastructure, gold and precious metal funds. They add inflation linked government bonds and consumer staple stock fund holdings.
Do remember that past performance is not a guide as to future performance.
Don’t hesitate to call me, as your financial friend, to talk things through – guidance and information as you decide where to send your money out to work.
Book a time to talk right here: calendly.com/yourfinancialfriend
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.
