Beware!! The press are cooking up a new firestorm of panic. But about what? What is the “désastre du jour”?
Our best guess is that it’s inflation.
And attaching to it, just to make sure you get a proper hit (think tabasco in a bloody Mary) it will be spuriously linked to the next stock market wobble.
Et voila! Proof positive of the nighness(?) of the world’s end.
The hunger to “report” the next apocalypse grows ever stronger. They have advertisers readers to impress educate after all. They will not be denied.
Brexit hasn’t delivered the goods, Trump has been completely useless at ruining everything (needs more time?), where next to turn?
Up steps inflation, taking an ambitious leg stump guard at the crease.
Inflation will be the root of all evil for the next year or so. Mark our words. (Or ignore us, either way just don’t panic.)
It will cause bear markets, volcanos, Manchester United not winning the league next year, a washed out / heatwave Summer, everything.
All things bad that you can possibly imagine and a fair few things you can’t will be laid at its door.
Sounds familiar? It should do…
All impending financial crises are reported in the same way. Not so long ago it was deflation and stagflation.
Remember them? They died a death didn’t they?
As neither of those materialised with any sort of gusto the press will move on. Inflation will surely deliver the goods.
There’s no denying that we will have more inflation, there’s no doubt it’s not the end of the world.
All those crises, and yet our health and wealth relentlessly improves decade upon decade.
And, yes, the investment markets are bound to take a time out, like they do every year, before resuming their unstoppable upward trajectory. That does not mean that inflation is the cause.
We’ve had bucket loads of inflation in the past.
The FTSE started at 1000 on 3 January 1984, it’s now at 7000, that’s 600% higher, up sevenfold. Add in dividends and you would have received and you’re at 700%+, up eightfold.
Inflation on the other hand has been about 200%, i.e. costs have trebled.
Hardly the devastating menace to our hard earned investments you might imagine is it?
If fact we’d all have made out like bandits if only we’d done nothing.
“The downs are temporary, the ups permanent” is a phrase you will not read or hear from any mainstream commentator. Despite it being so evidently true.
Please accept this wise counsel.
There are plenty of us who remember inflation above 5% and into double digits, it wasn’t fun but we’ve all survived. And thrived.
Don’t be surprised when you start seeing screaming headlines, surprise is the mother of panic. The idiots will panic you will not. We won’t let you.
Completely separate to the inflation “story” will be the stock markets, very predictably having a wobble. We just can’t predict when, by how much and for how long and therefore making portfolio changes in anticipation of the event is a fool’s errand.
“Corrections” happen every year more or less. 2016 was a great year for returns (with correction and all), 2017 is likely to be less so.
That matters not a jot however.
The only thing that matters is that you remain on course to hit your long term goals. Short term fluctuations have no lasting impact on the long term.
The aim of this missive is to prepare you for what might happen. You will be tested. Think of this as the annual fire alarm drill.
We’re in the fluorescent vest reclining in the deck chair in the car park, waiting for you. I know you’ll all make it out safely as long as you remember where you should assemble:
- Brace yourself for epic levels of nonsense and irresponsible reporting;
- Bear in mind that journalism exists to sell advertising space, not to inform you;
- We’ve no doubt it will get quite lairy; it doesn’t matter;
- If, even after this drill, you find yourself distracted / unable to resist / need reassurance please come and find me HERE and we can have a chat.
ps. Incidentally I’m available at all times if there’s something really important on your mind – England’s batting order this Summer, Norwich City’s new coach for next season, where I should be walking Frankie and Marlo etc.
pps. Please feel free to bookmark this article for future reference. Now and then you will need to replace “inflation” with “interest rates”, “house price crash”, “Trump re-election” but the message will be essentially the same.