Page 10 - DIY Investor Magazine Issue 24

‘YOU SEE WHO IS SWIMMING NAKED WHEN THE TIDE GOES OUT’* THOUGHTS OF SALTYDOG INVESTOR PART 1
I started looking after my own financial investments back in the mid 2000s, just after the FTSE100 had fallen by 48% during the previous three years.
At the time China and the Far Eastern Emerging markets were on a roll, and it seemed easy and straight-forward to make the value of my portfolios soar.
My question at the time was why, previous to that,
had the financial managers, who looked after my investments, made so much money for themselves and so little for me?
Then along came the financial crisis of 2008, when
over a fifteen month period the FTSE100 dropped by approximately 45%, and I learned that investing was not always plain sailing.
‘WHY HAD THE FINANCIAL MANAGERS, WHO LOOKED AFTER MY INVESTMENTS, MADE SO MUCH MONEY FOR THEMSELVES AND SO LITTLE FOR ME?’
Since then, even though there have been a number of minor hiccups, the FTSE100 has risen by more than 100%.
That is until two months ago, when the COVID-19 epidemic became hot news.
It occurs to me that this might be the catalyst for a major correction, as all the world`s financial markets have subsequently turned South.
The virus has unhooked the supply of goods from China and Asia into the West. This will disturb manufacturing and retail sales, as businesses run out of parts to use, and products to sell.
Even before this came along there were many other things that could have a detrimental effect on the world economies; Middle East unrest, rising world debt,
China/ USA tariff wars, climate change and the green revolution, the imminent arrival of Robotics and Artificial Intelligence, and the growing imbalance between the rich and the poor.
Any one of these has the potential to unhinge our economic world, and just maybe the corona-virus is the starter for ten!
‘AS DIY INVESTORS THE QUESTION WE HAVE TO ANSWER IS WHAT SHOULD WE NOW BE DOING WITH OUR PORTFOLIOS’
As DIY investors the question we have to answer is what should we now be doing with our portfolios.
Should we sell out completely, and cut and run, or simply batten down the hatches and wait for the weather to improve?
Back in 2008 I sold some funds and waited with the rest. It was a poor decision, and I learnt in hindsight that it is better to be bold than indecisive.
Trading costs are cheap, but recovering losses is time consuming, and expensive.
In early March, believing that there was a great potential for markets to collapse, I sold everything except gold funds and bullion; I even suppressed my infatuation with the hydrogen stocks, and they have gone!
Whether this was a good or a poor decision, the future will decide. I do know that for the present, it is nice not to suffer the anxiety of watching the markets retreat.
If it is a major collapse, it will have been a good move.
‘IF YOU HAVE TAKEN ALL THE ACTION WITHIN YOUR KNOWLEDGE TO MAKE THE BOAT AND CREW SAFE, THEN YOU CAN DO NO MORE – THE REST IS LUCK!’
DIY Investor Magazine | Apr 2020 10