11th March 2022 – Patrick McIntosh – Chartered Financial Planner

Thus far you may be surprised by the resilience in the value of your portfolio over the last few weeks and whilst there have been some negative performances there have also been positive days in the markets and this is because predicting the future is incredibly challenging.

Our Investment Committee met on Tuesday 8th March and for the foreseeable future will be meeting every other week – if not more frequently depending upon how the conflict evolves.  You are reading many millions of words and seeing graphic images alongside confusing narratives, we of course have our own opinions which we are happy to share with you in individual calls if you so wish.

Our friends at Vanguard and with whom some of your funds are invested have produced the following three very timely charts. Having reviewed these charts, you will understand why we have decided to remain invested.

We have consistently advised you to have sufficient cash to cover short term emergencies and up to a year’s cash on deposit or in Premium Bonds, so we believe there should not be any need for panic selling through the rest of this year.

Our consensus is that the conflict will last longer than anticipated, will be brutal and ghastly for the Ukrainians and in the end will also significantly affect Russia and the rest of the world.  In the same way that the pandemic unhinged the world for a while, so we believe central banks and fiscal policy will be relaxed in such a way as to maintain reasonable equilibrium in markets and therefore enough liquidity even to the point where we may individually get subsidies to cover our energy bills while oil gas prices remain at stratospheric levels.

As we said in our last Bulletin, peaks and troughs are getting closer together and this is particularly demonstrated in the Geopolitical sell-off chart.

The longer-term chart which we have attached due to the detail included, shows the way in which assets steadily increase over time irrespective of short-term fluctuations and we believe that most of you are invested for the longer term, which should typically be for five years or more; if for any reason you will need your capital sooner then you really should consider moving down the risk scale and speak to us if you have not already done so.

The final chart on Bull and Bear market infographic shows how short bear markets are and how long bull markets run.

The problem right now is that if we sell, when do we get back in?  Missing a few critical days when markets bounce back can have a dramatic effect upon the overall performance of your portfolio. 

Your strategy remains correct. The long-term themes remain intact. The world will recover, the world will rapidly move away from carbon and away from the blackmail of dictators now we have all been burnt!  Your investment themes continue to favour the evolution of humanity irrespective of the ghastly stupidity of the short-term position that we currently find ourselves wrestling with.

Remember that we continue to enjoy some small dividend income which is reinvested.  In some parts of the portfolios, we continue to hold reasonable levels of cash which we can allocate to the market when we think the time is right especially if we see significant corrections in prices.  This is the time to be brave.  We will continue to adjust the assets within the portfolio on a regular basis to make sure that we have exposure to those sectors which will benefit because of social, political and economic changes.

Stay calm and carry on!!