In a volatile world ……….

There are very few times in history where someone somewhere hasn’t commented on the ‘uncertain times’ that are being lived in at that time. These are of course all relative, but I think it is no exaggeration to say that there have been very few times previously where this comment has been more profound than currently.

There is Brexit and the impact this has had on Sterling and the uncertainty still ahead with the on-going negotiations with Europe, Donald Trump’s move into the position of ultimate power based on numerous promises which he has (to date) struggled to deliver on, the seemingly endless protraction of record low Interest rates around a world awaiting ‘a recovery in inflation’, political uncertainty in numerous countries, and the impact of terrorism.

There are, however – even with so many influencing factors – always market opportunities, these being spread over all sectors, not just equities. The skill is to foresee the pitfalls before they happen, and have the foresight to exploit the opportunities when they arise. Not a job for the faint-hearted or the inexperienced.

The title of this piece includes the word ‘volatile’, and it is this word that investors should hold close. A 12% rise in one year followed by a 10% fall the following year is neither good for your long-term performance or indeed your heart!

When looking at investing, look at the volatility of the investment you are considering, not only does this provide confidence in your long-term future, but as and when you start potentially drawing funds out, that lower volatility could be the difference between your living life as you want, or having to adjust your lifestyle following a ‘bad year’ in the markets.

What is the point in making a large gain at the beginning of the year if it’s all going to be lost again by the end? Our various Discretionary Fund Manager models all have a ‘caution-first’ approach, and controlling volatility is paramount and fundamental to their approach. Extrapolate this approach over many years, and the Risk-Reward returns really start to stack up.

Neil Dainton

Copyright Richmond House Group 2017