My Cold

A Tough Week

This week I’ve been suffering from a cold. Not full blown man-flu, but serious enough to stop me in my tracks. I’ve still been in the office everyday as I had commitments to keep. I guess my clients at our meetings this week probably regretted asking me how I was. Nobody can resist going on about their state of ill health for 15 to 20 minutes and then finishing off with, “Mustn’t Grumble”. I’m no different.

I apologise now to those I have grumbled to, but more importantly I seek forgiveness from those who will go on to catch my cold. You see now it’s not just a cold. Some random cold. To them they will have caught Howard’s cold. (Lesley Included).

Where did that come from?

So the repercussions started well before the first batch of throat lozenges and cold and flu treatments started. It was now personal. Where did I catch my cold, what caused it to strike now. The search started. I guessed a cold needs a little time to raise its ugly little head. It probably wasn’t picked up this weekend. But I couldn’t be sure.

Aha! I had attended the annual Nucleus Meeting on Wednesday and Thursday of last week. I was in a room of around 300 people. Quite a few probably had a cold. I must have got it from the meeting. I didn’t remember anyone coughing or sneezing though.

I remember now, the weekend before I took a quick ski break with some friends in France. I just bet it was due to rebreathing the same air as the rest of the Easyjet passengers for an hour and a half. Having caught colds after flights before, I had sniffed some of that evil First Defence stuff that makes your eyes water, prior to the outbound flight. I had forgotten to do it on the way back. That must be it. But that was a week ago. How long does it take to see the first symptoms of a cold?

Last week I had a couple of late nights and early starts. Maybe I’m just run down and so more susceptible to catching a cold.

I had many theories of why it happened but nothing concrete. Then I remembered that my first two client meetings in January were with different clients, both of whom were streaming with their colds. I should have caught their colds, but I didn’t. Nothing added up.

I just didn’t know why I had caught the damn cold now, where it came from, who I would pass it on to and how long it was going to last.

The darkest hour is just before dawn

Then suddenly as quickly as my cold arrived, it started to disappear just this morning. I’d had my first good nights sleep in days. I had already cancelled a full day investment meeting set for today as I thought there was no way I would be up for it. I now know I could have made it. So looking back I now know that this cold wasn’t the end of the world that I thought it was going to be and will not be the last cold I suffer from in my life. On the upside I had now just built a little more resistance against future colds.

What doesn’t kill you makes you stronger

Do I have anything else to report this week? Yes I do. It hasn’t escaped many of us that this week the stock markets of the world dropped quite dramatically. They caught their latest cold. Global stock markets had been ridiculously healthy for many months. They had started to look immune to any bad news. So much so that many individuals have forgotten what it feels like to have our investment confidence turned inside out. The media have been on the search to point the finger of blame and they have created many theories. But none have conclusively answered the question of why now?

Unlike a cough remedy, much comment has been created to make us feel much worse rather than help us on our road to recovery.

What next?

It’s probably too early to say. Getting back to fitness takes a little time usually and relapses often occur. It’s my job to re-trim our sails if the wind is now blowing from a different direction. Years from now this blip will look like nothing compared to the returns enjoyed from a lifetime of investment.

It’s worth remembering that long term stock market falls are usually brought about by recession. There is currently no sign of a global recession any time soon. Globally most companies are in rude health and they will obviously continue to strive to keep it that way. Short term setbacks happen periodically and often without explanation. It’s at this point where I say once again “Keep calm and carry on”.

If anyone feels particularly worried at this or any other point, remember we are here to listen and to coach. On Monday all the DIY investors in the US together crashed their trading websites, as many thought the sky was falling. It’s easy to feel paranoid in isolation. Happily you need never let the panic set in.

Finally if you are interested

Here is the most reasoned argument I have come across for what just happened. It’s a theory too, but far better than most of the others I have read so far. Huge hedge funds make huge bets to try to make huge profits. They need to know what the reaction of their opponents at the Fed is likely to be when the bet big in the future.

We should be asking why? What was so special about Friday that had so many people on tenterhooks? Was it:

• That US unemployment was at a new low?
• That US wage growth picked up to a new high of 2.9%?
• That the market was overbought and due a pullback?
• That Apple’s earnings disappointed, with shrieks that the global mobile handset trend has peaked?
• That the bond market earlier in the week pierced 2.6% and appears well on its way to 3%; a level last seen in the teeth of the taper tantrum in 2013?

There is a rational argument for any of these reasons being the animating factor behind pull back on Friday. However, there is one other event that happened on Friday which I believe does a better job of explaining what is going on in the market right now that seems to be getting missed in the media. It was Janet Yellen’s last day as Fed Chair. Jerome Powell was sworn in today and was quick to assert that he wants to be very transparent with how the Fed communicates its actions to the market.

The market has become accustomed to Fed chairs who have their best interests in mind, but when presented with a new Fed Chair an air of uncertainty takes hold. We all might have opinions about what kind of policies the next Fed chair will pursue but the simple fact is we don’t know how someone will react in a crisis until they are presented with one. The market seems to have a habit of testing Fed chairs soon after they take office. It challenged Alan Greenspan, Ben Bernanke and Janet Yellen too.