Hands up if you have had enough of politics
Yep. Just about everybody is sick of the European in/out mud-slinging. It doesn’t matter what I think about whether we should remain in Europe or not. What matters is what I do for a living. After all, I’m the captain of our ship, who is called upon to meet the passengers face to face occasionally, but primarily I’m on the bridge the rest of the time to ensure the safety of our passengers and crew.
If the press is to be believed, then we are about to enter rough waters. Now is not the time to choose to take shortcuts like Captain Francesco Schettino of the Costa Concordia did off Italy in 2012. That ended in disaster. So now having put that little picture of disaster firmly inside your head, pretty much like “The Truth” does daily, let me now take that picture away completely. Leaving Europe is not a Costa Concordia or a Titanic level event. It’s more likely to be trivial rather than life threatening and disastrous. In fact just like when The The QE2 ran aground off Southampton in 2008 on her final voyage. It resulted in a very embarrassed Captain being towed off by several tugs. No long term damage was done, the incident simply delayed her arrival by 25 minutes. The Duke of Edinburgh himself was inconvenienced! The reason for the incident was shifting sand banks. A known-unknown. We know sand can build up, we just don’t know by how much and where.
Mandatory Safety Drill
OK, let’s quickly discuss the safety features on-board HMS H.J.Scott & Co.
- We have some of the most experienced staff in the business. The Captain has served for 29 years and never lost a soul at sea.
- We constantly train and have plans in place should opportunity or disaster occur at any time.
- We never rely simply on one form of propulsion. We employ different funds to carry us forward at all times to ensure we are never in danger of a single catastrophic engine failure.
Level of Alert
There has seldom been a period where there hasn’t been some perceived threat. I discussed this further in a previous blog, Goldilocks Investment Conditions.
- We declared a higher state of emergency in March. Jettisoning our German DAX fund after we had made 6.9% in 6 months, taking a very convoluted path indeed. Since we left I’m pleased to say it has sunk by 7.4%.
- We actually first entered a low state of emergency in March 2015 in response to the oil price crash. We are floating higher than usual today because we sold all of our heavy FTSE100 shares. These are the big boys which have already lost a lot of their value. If we had still been invested in our beloved Vanguard fund, today would see it valued 15.86% lower than when we sold out. Ouch. Some of that lost value is due to the uncertainty in Europe, other losses are due to uncertainty in China, but most losses are due to selling pressure from the oil producing nations. Incidentally many other wealth managers are overweight Europe currently, expecting Mario Draghi’s continued quantitive easing (printing money) to lift Europe’s assets. I agree. Just not right now.
- We are now about to escalate our state of alert further. With effect from Monday all leave is cancelled and all staff are asked to report in. ? With less than 5 weeks to go I’m considering jettisoning further funds. After all, let’s never forget “Sell in May…..”.
Man or Mouse?
So you can see from the above your Captain is a self-confessed chicken! At the first sign of rough water he stops and waits. Preferring more settled seas where his passengers don’t spill their Champagne. Known-unknowns are never as frightening as we think. It’s the unknown-unknowns that we should fear.
Storm and Tsunami Warnings
This ship possesses sophisticated long range forecasting tools. A whole bank of flashing lights, buzzers, bells and klaxons. We are plugged into all the media and expert commentary there is. It’s all very impressive, but I’m sorry to say, it’s no crystal ball. The last time they were tested they failed. Exit polls & Economists much wiser than me suggested a hung Parliament at the last General Election. Wrong! So instead we don’t get hypnotised by all the flashing lights and prefer to see what William Hill think. No seriously! They were correct last time with their UK General Election betting odds and so didn’t lose out to their punters. Betting is where people put their money where their mouth is. Financial Journalists and Economists shout loudest but don’t have their hard-earned cash on the line. Here’s the odds currently.
For those of you who don’t understand betting odds this is what you can take from William Hill if you predict the outcome of June 23rd correctly.
- If you bet £5 that we will remain and you are right you will get back £6.11
- If you bet £5 that we will leave and you are right you will get back £21.00
I can’t see too many queuing up to risk a fiver to win it back along with only £1.11. Personally I’d rather bet the other way and experience the short-lived thrill of perhaps winning a full £16.00 on top of my stake. We will continue to check the odds to see if they change.
Full Steam Ahead?
Of course many ship’s Captains will continue on their journey without considering the short term dangers. Sticking with the old invest and forget insurance company way of building up life-savings. Instead their mantra is “Stick with it. It will all even itself out in the long-term. No need to worry. I’m not worried”. There is a nautical saying which I’m fond of to describe them, “The seabed is paved with the vessels of optimists”.
Our Current Course & Position
It’s very likely the UK will vote to remain in the EU. That wouldn’t be a shock to the markets. However if we vote to leave there will indeed be short-term consequences.
- Our “English Pounds” will not buy as much “Johnny Foreigner Funny Money”. It’s comforting to know that 4 of our current funds are denominated in Dollars, Yen and Rupees, a vote to leave would help all of those holdings, as our currency weakens temporarily.
- Probably most UK shares will take a short term fall, certainly those that haven’t already suffered. But many wealth managers are waiting for any short-term panic to buy. Like me, many have cash in the wings just waiting for the opportunity. In short we will be performing a smash and grab if the opportunity arises. Wilfully looting from those who simply panic when temporary setbacks occur.
I may look like a chicken on paper, but when things start to sink, I act like a pirate.
Please vote in my little June 23rd poll at the top right of this page.
Kindly add your comments below. Please include as many nautical terms as possible. ?