It couldn’t happen….could it?
Friday, 30 January 2009
A few months who could have predicted the unfolding economic events? Yes we have got through it so far, but where now?
Investors need a plan in these turbulent times as emotion will drive decision making. More of this point later….but I have detailed two independent opinions that all investors should listen to, then consider and reflect how to add such different perspectives to their decision making.
The first is Jim Rogers. Here’s a recent article in The Independent and also an interview on Sky News. Who is Mr Rogers? He and Mr. Soros's Quantum Fund famously "broke" the Bank of England in 1992, when sterling was forced out of the European exchange rate mechanism, costing UK taxpayers $1bn and making Mr. Soros and Mr. Rogers correspondingly wealthier. You may remember the event and possible the name of George Soros, but Mr Rogers possibly was not in your memory. Nevertheless, he believes what the government has done to help the banks is a terrible disaster.
He talks about the bankers getting away scot free still driving their Maseratis when rather than intervention; they (the Banks) should have been let to go bust. The gamble the government is taking with our money if Mr. Rogers is right, could be very large indeed. Irrespective of these views, we cannot predict the future, but every investor has now a new paradigm to consider. The last 6 months investors have experienced risks they may never have fully appreciated, so taking into account the boundaries of what they thought may happen and what has happened requires investors to reassess their portfolios.
Here’s another view. Could the Eurozone breakup? According to Hugh Hendry, founder of Eclectica Asset Management, he thinks the Eurozone could break up. Listen to his views in the FT on Video. He believes that with chronic deficits the cure is either for domestic prices to fall, which includes wages, or for the currency to fall. The latter is easier historically, but as there is no lira, peso, drachma etc for this to happen, could this mean the breakup of the Eurozone? My point is once again not to agree or disagree, as it is an opinion of what may or may not happen. Yet what could happen is on the agenda now when it has never been before. This means that investors need to reassess the risks to ensure they are comfortable with their investment strategy.
So we are back to our opening point, in these turbulent times as emotion will often drive decision making, it is important to avoid knee jerk reactions.
This is achieved by having a well thought out plan.
It is also important to avoid blissful non action. Heads in the sand are in our view recipes for disaster. There is no substitute for ongoing review making sure you are on the right track and the risk is what you think it is.
posted by Murray Round Wealth Management @ 14:58,
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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