Budget 2018 was announced and although there was not much wildly exciting or unexpected, I thought it may be useful to outline the main changes that could affect / be of interest to you.

Stock markets, in general, have continued their upward trajectory. Share prices, benefiting from the extraordinary monetary policy that Central Banks have implemented via Quantitative Easing, have now been on a bull run since March 2009, the second longest in history. There has been relatively little volatility in markets. Furthermore bond markets have been in a bull market for the last 3 decades, benefitting from falling interest rates, which are now effectively 0%. Cash is still yielding nothing. So where to from here? I think we are at the start of a new stage in the economic cycle, one in which there is more risk to the downside than of upside potential, and I would suggest that investment portfolios at this point in time should therefore be defensively tilted.

The past twelve months have been instructive in teaching investors about the volatility that should be expected when investing in equities (company shares). In early 2016, some investment markets had dropped by over 10% in a matter of days and the harbingers of doom were predicting a stock market meltdown. As we look back on actual stock market performance of 2016, we see that the FTSE World (Total Return) returned +11.9% in Euro terms and the S&P 500 returned 12.9% for the full calendar year. This would imply that those who sold their holdings as a result of the early falls, may well have ended up in a position where they crystallised a 10% loss and missed out on a 12.9% gain, a swing of 22.9%.

Given the existing high tax environment with some employees facing a marginal tax rate up to 52%, it is important that whenever possible advantage is taken of tax free remuneration.....

Once again the pollsters and media have been proved wrong in 2016, which is turning out to be a year of geo-political surprises. Not only does Trump control the White House, but Republicans also control the Senate and Congress, making it easier for him to pass legislation.

Equity markets were subjected to increased volatility in the first half of 2016 due to a number of events. These included economic growth concerns in China, severe oscillation in the price of oil, negative interest rates in some regions, and Brexit. Investors have also been focusing on the US interest rate cycle and the likely timing of the next rate rise. Despite the economic uncertainty equities rallied strongly in July with the influential US market, surging strongly.

Unexpectedly the British electorate have voted in favour of leaving the EU. I thought in the light of this it might be helpful to outline the market reaction and what may be likely outcomes over the longer term.

The increased volatility experienced in 2015 carried into the first quarter of 2016. Equity markets in the US and UK are now close to where they started the year (in local currency terms), with Europe slightly down. But that comes after much fretting over global growth, China and the fall in the oil price in January and February. These fears started to ebb in the latter part of the quarter, when there was more stimulus from the ECB, increased liquidity from China and the FED intimated that future interest rates increases will be carefully considered.

As expected volatility has returned to investment markets with a vengeance in early 2016. Although an increase in volatility was to be anticipated, the degree to which it has returned has surprised many. What are the reasons behind this volatility and what can we expect to see in 2016?

Divergence

In recent years, most Central banks have sung from the same hymn…

I came across an interesting article recently in the Wall Street Journal that I think can help investors. ‘Imagine the following theoretical investment opportunity: Investors can invest in a fund that will beat the market by 5% a year over the next 10 years. Of course, there is the catch: The path to outperformance will involve a five-year stretch of poor relative performance. “No problem,” you might think—buy and hold and ignore the short-term noise.