Investing involves risk that your capital goes down as well as up; you may get back less than you invested. The commentary below is not intended as a recommendation for you to personally buy or sell any of the investments mentioned nor to take any investment action whatsoever. Markets had a very strong finish to 2023 with both bonds and stocks rising >10% over November and December. This was driven primarily by inflation figures that continued to soften and corresponding signals from the US Federal Reserve that it would reduce interest rates in 2024. Cue the 'everything rally'. The question, as ever, is what happens next. Let’s be clear. This strategy is for the really quite wealthy. It makes sense to have at least £5 million of investable assets and probably more like in excess of £10 million of investable assets before a Family Investment Company (FIC) can make obvious sense. Additionally, little or no income/profits from the FIC should be required in the near term because FICs are the most tax efficient when the income and gains is retained and reinvested by the company over a long period of time (rather than paid out to the ‘shareholders’ early and on an ongoing basis). But if that’s the case then it really can make a lot sense... Investing involves the risk that your capital goes down as well as up; you may get back less than you invested. The commentary below is not intended as a recommendation for you to personally buy or sell any of the investments mentioned nor to take any investment action whatsoever. If the year ended today, the global stock market would be up about 12% in GBP and more than 15% in USD – a good year in almost anyone’s books. However, for many investors it probably doesn’t feel so good. Investing involves the risk that your capital goes down as well as up; you may get back less than you invested. The commentary below is not intended as a recommendation for you to personally buy or sell any of the investments mentioned nor to take any investment action whatsoever. Recent press reports have suggested that both major political parties are likely to change the rules around inheritance tax (IHT). It is widely rumoured that the Conservative Government will either reduce or eliminate IHT in the March budget. At the same time, a recent report in The Times suggested that, if elected, Labour would remove some popular exemptions to IHT including potentially the smaller companies exemption and the agricultural exemption. Therefore, it seems that regardless of who forms the next Government there is considerable downside risk to assets that target IHT mitigation. According to research by Micap (reported in CityWire), about £6.3 billion or 7.5% of the AIM market is held by IHT-focused products whilst an additional £8.8 billion is held in IHT products that hold private companies. That’s quite a large amount of investment for which the fundamental rationale may soon disappear. Investing involves the risk that your capital goes down as well as up; you may get back less than you invested. The commentary below is not intended as a recommendation for you to personally buy or sell any of the investments mentioned nor to take any investment action whatsoever. It was just over a year ago that I last wrote a ‘market update’. In many ways, not a whole lot has changed since then. In short, the relatively positive view we expressed in Sept 2022 has proved to be correct. So what happens next?! With interest rates as high as they are currently, it is tempting to simply take the rate on offer from your bank and avoid the riskiness that comes from investing in shares. Additionally, higher and additional rate taxpayers are finding supposed value in buying government bonds directly, which offers a significant tax benefit relative to earning interest from a bank. But the long term investor is still very likely to be better off invested in shares, even after the tax break is considered. 05 September 2022 Investing involves the risk that your capital goes down as well as up; you may get back less than you invested. The commentary below is not intended as a recommendation for you to personally buy or sell any of the investments mentioned nor to take any investment action whatsoever. What's Happened Financial markets have continued to have a tough time. The summer rally, which appeared material, has fizzled and global stocks are almost back to the lows they hit in June. 28 March 2022 Investing involves the risk that your capital goes down as well as up; you may get back less than you invested. The commentary below is not intended as a recommendation for you to personally buy or sell any of the investments mentioned nor to take any investment action whatsoever. Since I wrote to you in January, 'growth' oriented stocks have continued to underperform the overall equity market. For example, the Scottish Mortgage investment trust that is perhaps the most popular 'growth' oriented investment strategy in the UK is down 11% since then whilst the global equity market is down only 1%. This has been driven, in part, by interest rates that continue to move higher. Investors who have performed poorly over the past six months or so have probably been exposed in one or both of the following ways: 17 January 2021 Investing involves the risk that your capital goes down as well as up; you may get back less than you invested. The commentary below is not intended as a recommendation for you to personally buy or sell any of the investments mentioned nor to take any investment action whatsoever. If we looked at only the overall level of the global stock market in the past few months we could be forgiven for saying that very little has happened. However, a ton has occurred under the surface as some of the more popular investments of recent years have seriously struggled. My sense is that these effects are only beginning to be more widely discussed (there was, for example, an article in the Sunday Times this weekend on the recent underperformance of the hugely popular Scottish Mortgage investment fund). The crucial question is whether this significant correction for such 'growth' oriented funds has reached its nadir or if we're only in the early stages of reversing what has been perhaps the biggest investing trend since the 2008 financial crisis. To understand where we are going I want to briefly review how we got here. 21 June 2021 Investing involves the risk that your capital goes down as well as up; you may get back less than you invested. The commentary below is not intended as a recommendation for you to personally buy or sell any of the investments mentioned nor to take any investment action whatsoever. Hi everyone, I wrote in April that the 'burgeoning problem is that the better the economy does, the more likely it is that support for the economy will be pared back.' Well, the economy has been rebounding well and on Wednesday we received the first major signal that support from the US Federal Reserve will indeed be pared back - and that's probably a big deal for markets around the world. |
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