COPIERS AND FOLLOWERS UPDATE
Hi everyone, here is another update for you as we head into summer and the generally lower trading volumes associated with this time of the year, as money and fund managers park their strategies and positions for the vacation period.
The old saying of “Sell in May and go away” is down to the fact that the summer months can end up being more volatile compared to the rest of the year. As a fair amount of market participants cease trading during the summer months this therefore becomes a bit of a self-fulfilling prophecy, as the lack of volume and therefore lack of liquidity in the market can cause prices to move more aggressively one way or another.
As well as seasonality, recent resumptions in hostilities between the U.S and Iran have caused markets to be more on edge, not least as this has led to sharp moves in oil prices in the last week or so. Continued uncertainty amongst interest rate decisions at the Federal Reserve also continue to weigh on markets, as the central bank seems less inclined to give forward guidance than it did previously under Jerome Powell.
In terms of the portfolio, we have fared pretty well over the last few weeks, as our more defensive outlook has stood us in good stead. Our long-term lower-risk approach have limited any drawdowns and now we have started to see momentum and AI stocks take a breather, other sectors in the markets have started to see some positive moves.
Keeping a well diversified portfolio is and will always be a priority for me, but I am getting increasingly aware of the cash we have sitting on the sidelines at present. I think for the moment government bonds are a little too unpredictable with the uncertain political landscape in the U.K and central bank direction in the U.S, but certainly any prolonged volatility could present some opportunities amongst equities to put some of our funds to use.
As always I will keep you informed of any changes in the portfolio and please keep any questions coming in the feed.
Best wishes, Richard.
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Not investment advice. The author may have financial interests in the mentioned instruments.
Hi Richard, the cash question resonates strongly here—we sit at a similar level and share the same read: sidelines are uncomfortable, but prolonged volatility is exactly what turns them into an advantage. Your point on bonds being unpredictable in this policy landscape is well taken. Solid framework.... Show More
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