I intend to live forever ... so far so good!

Posted on 28 February 2017 by Douglas Chadwick

Stock markets are rising and would seem to be following this philosophy, even through the drama of Brexit, Trump and the Italian Banks insolvency. Those who are against the political classes and the cruelty of rampant capitalism would seem to be in the ascendency, and the establishment is on the back foot. We are in a strange world where broadcasters, commentators and the like are taking Mr Trump literally, but not seriously; whilst the people, the voting public, are taking him seriously, but not literally. These same broadcasters and commentators are saying that Brexit is going to be a negotiating disaster for the United Kingdom bringing poverty and famine to the masses as our economy shrivels. Yet John Redwood, a previous Single Market Minister, is saying there is no reason to delay, and exit could not be simpler. We simply give the E.U. Ministers the friendly choice of continuing to trade with the U.K. as they do today, or revert to the U.K. having W.T.O. nation status. After a certain amount of “pushing and shoving”, the European Union would conclude that the present status quo is the best for themselves, and they would opt for the existing tariff free version. Can it really be that simple? Well, so far so good, but who can foretell with any certainty where the world will be at the end of 2017. One thing is certain however, and that is the “establishment” and those in power who own and control the “assets” have the most to lose from these political changes, and they will fight back. The Trump voters, the Brexiteers, these people from the lower and middle classes of the developed world who missed out on the benefits of globalisation are not going to find the path back to any sort of prosperity a smooth one. However morally, and practically, there does need to be a rebalancing of wealth, and I for one say good luck to them! So what does this mean for 2017? Probably more uncertainty. Critical elections in Holland, France and Germany pose questions on the longevity of the European Union and the Euro. A potential stand-off between the U.S.A. and China would be uncomfortable. New technologies are arriving at a fast and furious pace, and the changes they bring along will be disruptive and difficult to digest. All or any of these might be sufficient to produce a major market correction. Look at the “Three Peaks” graph and see this as an opportunity to gain as opposed to losing. If such an event was to re-occur then it is necessary to be on top of the numbers and riding the wave and not at the bottom enjoying the dubious joys of a “wipe-out”. I know from experience that sitting through a serious market crash with no plan for dealing with it, is extremely disconcerting. Equally, watching a bull run from the sidelines is an equally frustrating experience. That`s why trend investing is so satisfying and rewarding. Whether it is about protecting your money from the downturns, or skilfully moving your assets into a booming sector, trend investing allows you to react and make the right moves at the right time. So how did the Saltydog portfolios perform last year? The Tugboat completely avoided the 16% drop in the market from July 2015 to February 2016. (This portfolio is designed to avoid the drops.) However this more cautious approach meant that it didn`t match the FTSE`s subsequent recovery in the second half of 2016, although it has picked up at the beginning of 2017. Turning to our more adventurous Ocean Liner portfolio, things look more exciting- as they should! Here you can see that our trend investing approach really took advantage of the markets up-turn from June last year, making a sharp jump upwards of 10%. So here we really came up trumps, avoiding the big downturn and reaping the benefits of the subsequent upturn.