Welcome to a wet and windswept Friday. June? More like June-vember…
Anyway, keep dry and enjoy this week’s News, Views and Truths.
After last week’s bombshell of the Woodford saga, this week feels rather dull. Now, dull is never a problem (unless, that is, you are writing a blog on a Friday) and certainly never within the world of investing. As many of you that have spent time in my professional company, one of my favourite quotes comes courtesy of Paul Samuelson who sums this up perfectly:
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”
Yet, dullness does not sell; being boring is not viewed as being particularly enamouring and as such, many look to gild the lily. Where am I going with this? Well, a very interesting chart came across my desk earlier this week…
I love a good chart and this one is a belter. This shows where analysts predicted the yield of the 10-year UK Treasury bond would be during this year. The black line is the actual yield.
Could you get it more wrong? I do not think so.
Yet many continue to predict; many continue to predict in order to espouse some belief that they have a certain prescience in financial markets and as such, should be followed in an almost religious way. And if you do not agree; if you do not follow their every word, you will miss out on the returns because everyone else will follow and you will lose.
And as such, many commentators, or analysts, or economists gild their lily with the veneer of prescience. And that is a dangerous thing.
Because, as humans, we are hard-wired to the ‘fear of missing out’. FOMO is a term used to describe the anxiety we experience when we see that other people are experiencing something that we are not, be this attending an event or investing in something that is viewed as the next big thing. And if experts are telling you that this is the next big thing, there is a chance you will buy a ticket for that particular bandwagon.
And if it is too good to be true, it usually is; I refer to last week’s blog and this week’s opening gambit.
Many people ask what I do for a living. What I really do is remove the emotion from my clients’ investment decisions, so that what they do is the correct thing and not necessarily the most attractive thing.
There is no fear of missing out if you are not looking for it.
Anyway, it’s still raining. Will it ever end? Will I get my lawn cut? Will a match at the Cricket World Cup ever get played again? Who knows? What I can promise is that I will be here next week and I will finish off this week with a playlist. We have tried to keep it positive; I promise. Stay lucky!
