What Happened Last Time We Were Here?

Past performance is no guarantee of future returns, as well we know. But the behavioural psychologist in us says otherwise and although we know we shouldn't listen to it, we do. So when investment markets reach 'heady' heights of the 'nervous (five thousand and) nineties' should we pre-empt the mass pessimism and do something before the investment world implodes again taking our pensions with it?

The last time the FTSE was at 5,900and something was in June 2008, passing through on it's way down to 3,530 in March 2009. Obviously that was during the global banking crisis which we are still in the depths of. If you don't believe me, today Lloyds has posted a £3.5bn loss and the general expectation is not 'if' Greece defaults, rather 'when.'

So this, coupled with the greater influence of 'short termists' on equity prices may suggest that a prudent approach might be wise at this stage. But that's not financial planning, that's speculation which we don't condone! However, whilst 'long only' funds must do according to their mandates and invest wholly in their appropriate asset classes there is a deepening pool of investments where the managers have greater flexibility in what they may invest in, from cash to gold to equities and bonds in the proportions they deem fit for the prevailing conditions. With more of these funds demonstrating long standing, proven track records, we believe these should feature more readily in the investment element of financial plans, to reduce overall volatility whilst still achieving desirable returns.

If you would like to know more, please contact us.