Investment-wise the last 12 months have been odd. It was reasonable to expect a decent amount of turmoil, but we didn’t even get the usual 10-15% temporary drop.
What will 2022 bring? I left my crystal ball on the drive with stuff the kids weren’t using. It was gone the next morning.
Many things will happen, even more won’t, some will be forecast, most won’t.
The economy, politics and stock markets will go up and down, this way and that. Probably never in unison.
With those thoughts in mind, our investment strategy for 2022 will be to remain the owners of the most successful companies around the world. We continue to have 100% faith in the desire of our fellow humans to improve their customers’ lives, and by extension their own. Inevitably this will result in long-term global growth = improved health and wealth for all + continued financial security for you.
In short, we have no doubt that equities are the only asset class that fully captures human ingenuity, which is the most valuable asset class on earth.
This is not the best investment strategy devised but it works for us and there are infinite worse strategies.
As always, expect big swings up and down. The drops will be temporary and welcome as we look to take advantage and add a percent or two to your returns.
2021 produced no meaningful swing and it’s now 12 months since we last acted so we will rebalance your portfolios* to bring them back in line as follows:
- 30% Large companies around the world – the biggest most successful companies around the world.
- 30% Smaller companies around the world – the next tier of successful companies around the world.
- 20% Companies in emerging markets – the future companies and countries of global growth.
- 20% Government bonds around the world – as part of your war chest.
In so doing we are “selling high to buy low”, which is the closest thing to a free lunch there is.
Many of your peers prefer “selling low to buy high”. Many of your peers are not doing as well as you are.
For the more cerebral / bored, I highly recommend “The Winds of Change” by Howard Marks, one of the most successful investors of all time. Use this link to listen to or download the article: https://www.oaktreecapital.com/insights/memo-podcast/the-winds-of-change
Please be reassured that we are alert and primed for action should the opportunity arise.
If it gets scary, your war chest of cash and bonds will see you through, as will our continued empathetic, wise counsel.
To remind yourself of our simple approach to investing please CLICK HERE.
And welcome to 2022, it will be a year like no other, or maybe it won’t, who knows?
*This rebalance applies only to your pension and ISA accounts, anything else will wait until the new tax year to avoid triggering tax charges / reporting.