Category: Knowledge

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Turn off the news

“I’ve been saying this since the 2009 Financial Crisis, and I’ll say it again today:

Turn off the news.

Back then, I was glued to the financial media. I’d watch the major networks, read the papers, soak up the headlines. I thought I was doing my job as an investment manager by being informed.

But all anyone did on TV was scream at each other. The newspapers were filled with terrifying headlines designed to make you panic — and usually trick you into doing something stupid with your money.

So I stopped.

I stopped letting the fear machine into my head. I stopped investing based on other people’s emotions. I decided to let the market tell me what was happening — not the suits on TV or the clickbait headlines.

Fast forward to today. I’m seeing people on social media flipping out about geopolitical developments, bombs dropping, oil surging, and the stock market “about to crash.”

The U.S. dropped some bombs this weekend and the fear juices are flowing.

I get it. The world feels shaky sometimes.

But when those feelings rise up, I take a breath… and I go look at the charts.

Because here’s the truth: the market is the news.

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May The Force Be With You

“Sell in May and go away, don’t come back till St. Leger”s day”

When trading shares was a manual process, the above investment practice undoubtedly held true 70% of the time. However in this current fast-paced, algorithmic trading world, the results obtained have become no better than 50/50. Effectively the saying is today about as true as any other old wives tale. We do however continue to make higher returns over the Winter months usually. The beginning of 2025 saw early impressive returns eliminated as Donald Trump sent the markets into a tailspin with his tariff announcements. As this behaviour doesn’t occur every year, don’t expect this year to follow traditional patterns.

Politics and Investment

In my previous blog “The stroke of a pen” I quoted Eoin Treacy who correctly deduced that “The benefit of using tariffs for the purpose of manipulating the bond market is they can be turned off with the stroke of a pen.” March was not likely to bring a market meltdown like the structural problems of the Great Financial Crisis of 2009 did. The Trump tariffs have been raised and lowered in successive waves faster than a lady of the night’s underwear. (Toned down analogy to prevent blushes) Through pronouncement after pronouncement on Truth Social, the rattle of a keyboard rather than the stroke of a pen, which have seen the markets, and also currency rise and fall quickly in response. Trying to respond by buying or selling is a fools endeavour. I believe it is important to not let our political affiliations lead our investment decisions. Many Americans sold down and ran to safety, because they were card carrying Democrats. They have missed out on the best May performance of the US markets since the release of “Pretty Woman” in 1990. Our portfolios too have surged, held back only slightly, by a weakening Dollar. I can see the Dollar weakening further, but I cannot see the Pound strengthening much further. UK debt problems look set to accelerate as the amount collected in taxes continues to fall, making investment into the UK fall.

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Market Corrections

There have been 27 market corrections since 1974. There’s no universally accepted definition of a correction, but most people consider a correction to have occurred when a major stock index, such as the S&P 500® Index or Dow Jones Industrial Average, declines by more than 10% but less than 20% from its most recent peak. It’s called a correction because historically the drop often “corrects” and returns prices to their longer-term trend. 

Even understanding that corrections do occur regularly, often doesn’t help investors with a propensity to worry to handle these setbacks. Every significant reversal from an upward trend feels like a punch to the stomach.

Regular market setbacks are a function of the system, not a glitch. Without smaller setbacks along the way, you can be sure a much larger crash will follow at some point. Usually all the factors that lead to a change in investment sentiment were already in place and accepted, until one day those same factors are perceived as unacceptable. Still we need to learn from these episodes and endeavour to understand why market confidence suddenly evaporates. I continue to read extensively and believe that one of my go to sources of information succinctly describes why the markets have been so upset, so quickly. 

Trump

On an obvious level the upset market is all down to Trump’s actions, but probably not for the reason the mainstream media has suggested. In most of the “quality” US financial press channels, Donald Trump, Elon Musk & Co are deplorables. Stirring hatred through clickbait grabs attention, accumulates viewers and readers, which brings in advertising revenue. So don’t expect a balanced view anytime soon from presenters and journalists schooled in never wasting an opportunity to present regular occurrences as complete crises. However don’t forget a large minority of the population of the US didn’t vote Republican and want to see him fail, many traders on Wall Street included. 

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