Positive Results in Uncertain Times
28 May 2026
To all Financial Friends
The last three months saw us swinging from a better outlook for interest rates and inflation to just the opposite. Donald Trump’s declaration of war with Iran effective 28th February 2026 was almost 3 months ago. Most would have expected a stock market 'crash' yet we only suffered a so called 'pullback'. Markets reacted negatively during March but have somewhat recovered since. The uncertainty of a peace deal or not, with Iran, and the possible opening of the Strait of Hormuz allowing oil and other essentials is key. One minute a peace deal is close, the next, Iran is to be blown out of existence. Such uncertainty leaves investors not knowing which way to turn.
If you like to read, absorb and think things through then here are the words. Choose to listen and learn on the go by clicking on these words: here is the audio link.
Pause with me for a moment if you will. So easy to mull over the ups and downs of markets. Less easy to hold in our feelings of death, destruction and oblivion of people, families and lives in all of the areas of brutal conflict. As a dear elderly lady said to me "my dad always used to say, why can't we all just love one another?" It's a good question is it not?
The Problem
In financial terms what happens in the wider world hits our economy and our pockets. Most keenly the rise in petrol and diesel prices is obvious. The energy price cap to control our bills is to rise by 13%. We are told to expect food price inflation. Political changes to the left worry the bond markets. Such a political drift could cause more borrowing and higher interest rates demanded for the risk the increasing debt creates.
The alternative is to haul back on welfare, pensioner triple locks and energy bill support and perhaps household support funds for those in real need? Readers of these commentaries and Financial Friends will surely be aware of the unusual short-term gains students have been making. The uncertainty causes volatility at times, pushing specific assets to profitable levels even in months rather than years.
The Solution
A meaningful contribution towards paying the bills and preserving our lifestyle and security is right before our eyes.
In recent times students have seen returns of 11.4% in 4 months from infrastructure holdings, 25% in funds holding defence stocks over just 6 months, and more than doubling their money in 12 months in gold and silver. On each £1000 held this meant profit (turned into cash in the bank in 3 working days) of £114 from infrastructure, £250 from defence and over £1,000 from gold and silver.
See below for 41.8% from technology funds in just the last three months despite the breakout of war. That's £418.80 cash in the bank per £1000 invested - yes, in just three months.
Figures quoted are free of tax where funds are held in ISAs and profits are stored free of tax in Pension holdings. Subject to dividend and capital gains tax after use of annual allowances.
Profits can be taken to support living costs if needed, or to be held to reinvest when markets fall, to leverage returns for the future. The same strategy can be used to support leverage of returns in pension funds also. Never, never attempt to sell at the highest point and invest at the lowest point. You will not succeed. Be satisfied with taking meaningful profit and, should you choose, leave the original investment in the fund to fall and rise for the future.
Against the Flow of Investment Culture
What is written here goes against the traditional investment culture that investing must essentially be long-term. Also, that diversification of holdings necessarily always lessens risk by balancing bond and equity holdings. As a Financial Friend student, you know well that investments fall as well as rise so losses can be suffered. In the many years of my time in these markets, I have always been clear that investing for the short-term was never proposed. I do not propose it now, but would it not be remiss to fail to recognise the short-term profits being made and take advantage?
Commentaries that you read in the financial press or here are not advice. Commentaries seek to provide accurate information and offer comparative insights. Our commentaries clarify and make you aware of your options and choices. What you could do, not what you should do. Information and guidance allows you to come to your own conclusions.
The evidence before our eyes proves that short-term significant gains being made in real life. Fact, not fiction. The extraordinary uncertainty in the world and in the markets causes volatility that triggers this unusual outcome. Please be aware of risk and opportunity. The current recurrence of the failure of negative correlation between the fixed interest (bond) market and equities underlines the potential failure of diversification as a means of portfolio protection.
War, Strait of Hormuz, Interest Rates and Inflation
THE LAST THREE MONTHS (to 25/05/26)
You may be surprised at results for the last three months which may feel counter-intuitive. Negatively, funds holding defence stocks and gold and silver have fallen by -9.9% and -15% respectively. Positively, Natural Resources have risen by +7.5%, Global Infrastructure gained +10.1% and Global Technology up by a staggering +41.8% - yes, in just three months.
Defence stocks and gold can fall due to profit taking. Investors are sucked into the euphoria over AI and technology and it appears profits may have been taken to pursue the AI, dream of the future. For some, selling gold/silver is to seek greater safety than the volatility of gold/silver, by depositing funds in USA banks expecting rising interest on their deposit savings.
The FTSE 100 Index has risen from around 10,197 points to above 10,500 points at times - a rise of some 3% in a matter of days. The rise and fall of the index seems to reflect the hope of the so-called Memorandum of Understanding between the USA and Iran to 'end' the war, being agreed. If so, uncertainty will still remain in the markets although the response could well be for a strong market rise across the globe. You have to be in it to win it but specific assets, explained in previous commentaries, may prove a defensive holding for the reasons given if agreement fails.
Rising inflation and interest rates suggest we all need to look towards making our money and pension funds make more money to help protect our lifestyle and security.
Triple Reflections
This commentary is better understood for readers of our past commentaries unravelling the history for what we have called The Big Divide. See these on our website. The Big Divide is your choice between traditional portfolios of diversification of assets and the choice alternatively of specific assets. Defence, infrastructure, gold, natural resources and consumer staple funds have been discussed.
Euphoria over AI and technology investments are the reason for American indices (S & P 500 and Nasdaq etc.) hitting all time highs. Further commentary over this euphoria will be coming soon. Also look out for commentary on the various strategies that some students have adopted - what are the opportunities in the markets now that will benefit the strategy you have adopted? All coming soon.
Get in Touch
As always and ever, I encourage you to get in touch. The new threats to financial survival and the cost of living means that those with money in pensions and elsewhere need to protect it to preserve the purchasing power of what they have. For those with little money it is so important to build up savings profitably and prudently. Growing and protecting your monetary reserves to defend your security and current lifestyle matters now more than ever? Talk things over with Rob? Book a time and date right here www.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.
