In this edition I look at the good and bad bits of investing worldwide.
Putin affects markets beyond the borders of Russia. Concerns over Fed’s response to inflation. Holiday sales up but some luxury goods sales slowing.
Some fifteen or so years ago the bulk of our clients’ portfolios were invested in the UK; now typically only about half of our client’s investments are UK based.
Why? Our job is not to be patriotic, but to look after our clients’ money to the best of our ability and the reason for our increasingly geographically spread portfolios comes back to the old eggs and baskets approach – the bigger the basket the better. The financial markets of the World provide a large basket and diversity is the target. Investing in one country, even if it is your own country, increases risk as countries, like companies, have both good and bad years.
Flexibility is key here; modern methods of investing mean that monies can now be moved both quickly and cheaply between differing funds and parts of the World and as an adjunct investment in larger UK firms is effectively in many cases an international investment, since their operations are worldwide.
Research is vital to investing and large investment houses (funds) now have teams in most if not all overseas markets with the express purpose of investigating opportunities in these markets.
The above paragraphs summarise the good bits – the possible negatives include less robust overseas regulation of companies and markets as well as currency fluctuations; if the value of Sterling falls against a basket of currencies, then our clients’ overseas holdings do well, if however, the situation is reversed then foreign holdings are down valued.
We reckon that the increased risk of overseas investment is more than offset by the ‘eggs and baskets’ advantages noted above – as a result of which one might almost say (that) the sun never sets on Johnson clients’ holdings.
A recent article in the FT stated that 40% of the UK population would struggle if faced with an unexpected bill of £600 or more and I find this frightening, especially given the recent 50% rise in energy costs.
I did not do well at school, leaving at age 15 but I do wonder about the practicalities of what is taught – why do we not teach our kids about handling money, saving and budgeting? Whilst on my soapbox other things that should in my opinion be taught are stuff like basic CPR and cooking food, both of which seem fairly important to me.
So, to summarise – many kids seem to understand political correctness, the arts, social responsibility etc but they can’t budget to be able to afford to buy food (which in any event they can’t cook) and they will not be able to help you if you have a heart attack. On the good side – they can probably fix your pc or mobile...