A Cynic’s View: Too Early for Merry Xmas

Too Early for Merry Xmas

It happened last week; someone wished me Merry Xmas. It was nice of them and it’s fair to say that I probably will not see them again this year. However, am I being churlish if I suggest it’s too early? Where do you draw the line? I mean, I see people in August that I probably will not see again during the calendar year.

Anyway, enough humbug. It seems to have been a fairly quiet month. I geared up for the Budget in anticipation of yet more significant changes to pension legislation. Nothing happened. In fact, nothing much happened in the Budget whatsoever.

Donald Trump managed to get his fair share of column inches. When doesn’t he? Most commentators suggested that he received a bit of a kicking in the American midterm elections. Donald, of course, came out and hailed it as a great victory. In spite of myself, I find that I almost admire him, purely for his nerve!

Speaking of America, I was surprised to read that Hilary Clinton is again thinking of running for President. You really would think she would have had enough by now. I saw her interviewed a while ago with her daughter and I have to say they were both very impressive. Maybe in the not too distant future we could have a leader of the free world called Chelsea! I’m sure she would be an improvement on Donald.

The world does seem very messed up at the moment. I read this morning that some right-wing nutter from Banbury has been prosecuted for, among other things, naming his baby Adolf. Heaven help us.

As I’m writing, a newsflash appeared on my screen saying that a Brexit deal has been agreed with the EU. We will have to wait and see. If Mrs May gets this through Parliament, I’ll be flabbergasted. By the time you are reading this we will probably know. It really has been an arduous couple of years; like watching a train crash in slow motion.

Turning to the markets, we have seen much greater volatility in 2018. I know from speaking with clients that many are currently a little nervous and with share prices flirting with record heights and inflation picking up, markets may be extra-sensitive to any bad news. However, selling up and hiding in cash for a short while is rarely the best option and could cost investors far more over time.

‘Timing the market’ seems like a deceptively easy investment strategy – sell high and buy low. However, often after a sharp fall, historically, there has been a period of rapid correction, where markets retrace their losses and actually move higher. In some cases, this has happened over a single day. These ‘best days’ have often happened shortly after the markets have sustained a shock. Being out of the market means investors may miss out on some strong returns, as well as repurchasing their holdings at a higher price than they sold
them for.

Over the long term, the effect of missing out on some of the best performing days makes a pronounced difference to a portfolio’s performance, which is why we believe staying invested and riding through the storm generally leads to stronger long-term performance. Sometimes, a little ‘fear of missing out’ is no bad thing.

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