One particularly useful lens to survey the investment landscape through is that of megatrends. By taking due note of the trends shaping how we live our lives, we can stand on much firmer ground to position our portfolios for the future – particularly when we observe that in many cases the pandemic has accelerated trends which were already well in motion.
There is no doubt that managing wealth properly, so that it builds and lasts, is a discipline. What is perhaps less well appreciated is that it calls for a multi-disciplinary approach. This is why institutions employ specialists to cover the various parts of the piece, and why people typically call in the professionals once their wealth gets to a significant level, so that no strand is neglected.
Home bias is the tendency for investors to allocate a large proportion of their portfolio to domestic equities which is, of course, the enemy of the diversification across markets we should seek. The reasons behind this pattern (which is seen all over the world when investors act without professional guidance) are many.
Wealth management is replete with adages distilling investment wisdom. One of the most enduring is the rather obscure-sounding “Sell in May, go away and come back for St Leger day”. This expresses the belief that the best returns are to be had between autumn and spring, and that investors should take profits as summer really gets under way and not return to the markets until the time of a horseracing event traditionally held around 8 September.
When it comes to how the average person interacts with investment information, I’m often put in mind of the famous lines, “Water, water everywhere, but not a drop to drink”. Investors are drowning in content, yet all too often are still left thirsting after indicators of what they should actually do.