At the time of writing, the FTSE 100 sits marginally higher than it was at the last edition of Prospects. This, however, belies a story of difficult investment conditions and in particular some sharp drawdowns across growth asset groups.
These falls, coupled with weaker markets elsewhere around the globe, particularly for the three major US indices, has made troublesome reading for many clients. Drawing on a number of years at the coal face of investing, I continue to feel that whilst some of last year’s gains have been eroded, the setbacks are obstacles that a long term investor should be able to ride through.
The current challenges are faced by investment managers across the whole industry and many readers will know of the Scottish Mortgage Investment Trust, one of the largest and best known investment trusts. In the words of Tom Slater, the lead manager, writing in these pages about the tough times we’re facing from an investment perspective, “resilience during drawdowns is necessary to generate long-term returns.”
Amidst the gloom, we continue to think about our place in society and the communities in which our staff are based. Fund raising is very much part of the fabric at JM Finn, both for the fun and camaraderie it creates, but also for keeping us focused on the wider challenges that exist. Periodically, we change our corporate charities, those causes which our fund raising across various events will support and, following a poll across the firm, we have selected two new charities, in the Brain Tumour Charity and YoungMinds, to accompany existing partner RDA. Read more about these causes here.
Succession planning is one area of managing wealth that can be particularly tricky, especially when it comes to handing over a family business to the next generation. Our wealth planning team regularly speak to clients about their plans for passing on their wealth and how to make it as seamless as possible. In times of transition everything is uncertain; so says Jess Mayhew in her article here, as she explains how channelling the emotional aspect can be the key to a sensible hand over.
How the country property market is faring is another issue tackled in this edition alongside a look, by regular contributor Brian Tora, at the likelihood of stagflation, a situation where there is high inflation but a contracting economy.
No doubt it will be the rise in the cost of living that will continue to dominate the news headlines and investor sentiment as we march towards the summer. Despite the current pressures on global economic growth, central banks seem set to raise interest rates further to try to contain price rises. This can only add to the pain being felt by consumers - a challenging summer lies ahead in this respect.
The great investor Benjamin Graham said: ‘In the short run, the market is a voting machine but in the long run, it is a weighing machine.’ We do not profess to be able to predict the direction of voting but we remain comfortable about the prospects of the businesses that we hold on the scales.
Hugo Bedford CEO
