King sounds alarm on growth
Friday, 16 November 2007
“Compared with the last 10 years where we have seen a remarkable degree of stability, this looks like a fairly sharp downturn.” The FT Thursday 15 November 2007 To some readers, these are very powerful words…and the fear of a slowdown says King, might prompt 2 successive falls in interest rates. These messages are always interesting and in truth, it is difficult to predict the reaction by investors and the markets. Businesses may feel that its time to batten down the hatches…Lower confidence and lack of job security might curb house price inflation. Equity investors may see valuations fall…everyone will have a view. The question, is what action you should take with this information?
Here lies a quandary. If you rely on active fund management…generally that’s most investors by default… (it is our experience that most investors do not really appreciate how fund managers actually manage their funds…click here for help)… then a flight to cash may appeal to be attractive. But what if the predictions are wrong? A switch could be a poor move. Active funds could use derivatives to limit any downside, but if the market makers feel the market is falling, the price of these options is not going to be cheap. So what action do you take?
Use this uncertainty in the markets as a catalyst to review your investment strategy if you rely on active fund management. It is not a time to make short term knee jerk reactions due to market conditions and move between actively managed funds in the hope of second guessing the market. Why? Because when this short term volatility ends, guess what, some other short term ‘unexpected’ event will hit the markets. The key is to have an investment philosophy you understand, which is geared to your long term objectives. If you do not have an investment strategy, documented by the way, with an agreed investment philosophy, you may be relying more on luck to achieve your objectives than a properly executed plan. Which would you prefer?
posted by Murray Round Wealth Management @ 14:41,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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