Page 4 - DIY INVESTOR MAGAZINE - NOVEMBER 2018
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 A FLIGHT TO QUALITY:
I AM AND DON’T CALL ME SHIRLEY
 When market commentators compile their 2018 retrospectives, one word that is unlikely to feature prominently is ‘boring’.
A decade of quantitative easing created relatively benign markets and by August 2016 the Bank of England had poured £435bn into government bonds, adding a further £70bn following the UK’s vote to leave the EU.
There was an uneasy calm – we’re taught that markets dislike uncertainty, but valuations remained high despite the seismic global economic, political and social turmoil; those that claimed to have done so must have started to wonder if they really had seen it all before.
So the sell-off that spawned the CNN headline ‘February was an insane month for the stock market’ came as a bit of a rude awakening; was that to be the inflection point beyond which markets started to head inexorably downward?
Apparently not, the FTSE 100 clawed its way back to
a record high closing at 7859 on 21st May; but then, to wring every last morsel out of an admittedly tenuous Airplane analogy, we were back down to earth with a bump on 26th October at 6939.
More volatility for sure, but no sign of a collapse yet
and you could scarcely ask for more uncertainty than the PM clinging on like grim death to a Brexit deal
that seemingly nobody supports, and her would-be successor saying that he didn’t know how he would vote in the event of a(nother) ‘People’s Vote’.
US equity markets have become tangibly more risk averse, and some emerging markets have taken a hiding; tech stocks have been revalued but, at the moment, nothing looks set to ‘burst’. Having said that, there remains a marked contrast between the privateers predominantly sitting in cash, and the pros relying on their experience, analysts and algorithms to deliver solid investment returns.
For investors, short term fluctuations are part of life’s rich tapestry, and we have some good insight from our
tame DIY investors; quality is a watchword for those building long term wealth – both Saltydog Investor and Wheelie Dealer opine on the need for patience and Humbug describes his current ‘masterful inactivity’ in The Great British Trade Off.
The flight to quality could explain why Bitcoin hit a low for the year slumping 15% to $4,200 earlier, but this seems to be more than a Pavlovian retreat to defensive investments; asset managers are engaging retail investors with an unprecedented quality and quantity of information to allow them to make informed decisions when targeting income and long term capital growth.
In this issue JP Morgan tells us ‘A tale of two sisters and wealth creation’ and RM Funds describes the ‘alternatives’ to fixed income strategies; those looking to add property to their portfolio will find ‘EPIC for income’ from Ediston and Polar Capital describes the ‘Disruption: Driven by technology’.
Stockomendation delivers the tipsters’ view of the high street, justETF explains how to take sustainable income from your portfolio and we take another look at actives vs passives.
We welcome ‘The Female Money Doctor’ for the
first time and wholeheartedly endorse her efforts to encourage more lady investors and their demand for ethical investments; they should approve of the launch of The Global Sustainability Trust, and there’s much more besides.
There is plenty of evidence of the cyclical nature of markets, but almost every day seems to deliver another curve ball; DIY Investor passionately believes that access to education and good information is key – ask@diyinvestor.net
First time – or have you been nervous lots of times?
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