We certainly enter 2019 to a world of uncertainty. As I write this Donald Trump is still fighting with Congress about funding for the Mexican wall, they are rioting in Paris, and there is much uncertainty in Britain about Brexit. Having been to Berlin I have no doubt that building walls create more problems than they solve – Paris is a symptom of what happens to any government who tries to raise taxes. I am optimistic that Britain will solve its problems in due course.
Add to this the volatility in stock markets all around the world, and it’s easy to see why investors everywhere are nervous. Over Christmas I was in a bookshop, and the shop assistant asked me whether I thought she should move all her superannuation to cash in case a major crisis hits. Having been an investor for more than 50 years, I can guarantee you there was never a time when everybody was confident about the financial situation. If the market is booming the question is “am I too late” if it crashes the question is “Will it go much lower?”
As always, my answer is to hang in there, have faith in your portfolio, and think long-term. Recently, at the Walter Scott conference in Edinburgh, Professor Paul Marsh of the London Business School told us the best advice for most investors is to leave their portfolio alone and focus on something else.
I must confess that’s not something I can do, but I guess I’m in the business. But what I did do over the Christmas break is analyse the shares I do own and satisfy myself that the businesses underlying the shares are in good shape. If they are, their future prospects should be good.