So we wake up this morning with the news of no majority for the Conservatives, no doubt there will be much media coverage and political twists and turns before the situation is clearer.
What the future holds no one knows and what interested me whilst watching the Election Coverage last night on TV and Social Media were the references to:
- “Sterling falling on back of the exit polls” i.e before any results were know.
- How “markets hate uncertainty” – when has the future even been certain?
- Portfolio managers – “watching results and ready to make any portfolio changes”
Uncertainty is a fact of life, it is because of this uncertainty that equities deliver the above inflation returns they do (over time). Compare this with bank deposits, they provide certainty that the principal value cannot fall and is fully guaranteed (for Deposits up to the £85,000 FSCS limit), the return received is generally therefore lower than equities.
If we wish away uncertainty/volatility then we might be wishing away the very thing that generates our returns.
On the matter of “portfolio changes”, one of key tenets of the way we manage money for our clients is that “Markets are broadly efficient” put another way news is incorporated in equities prices straight away and therefore trying to position a portfolio in anticipation of future events is, to us, speculation not investing.
If your goals don’t change, your plan does not change, if your plan does not change your portfolio does not change.
Have a great weekend
Neil
