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What we’re thinking about markets right now
Two meetings this month. The interim one we wrote to you about, where we reviewed every allocation and decided to rebalance. And the full committee meeting on 18 September, where we checked how all of that landed and took a proper look at the world. Here’s where things stand.
The rebalance is done
Both portfolios are back at their target weights. And here’s a small confession about timing. We bought bonds in early September, and bond prices rose shortly afterwards. That looks like skill. It was luck. The decision was made on schedule, by rule, and the market happened to co-operate. Some years it goes the other way. This is why we don’t claim credit for timing in either direction: the rule does the work, and the luck averages out.
Interest rates, briefly
The US central bank raised rates this week, and markets expect more to come. The Bank of England held, but a rise before the end of the year looks likely here too, with inflation still refusing to lie down.
For your money, the practical point is this. Cash and bonds are paying yields we’ve not seen in years, and the funds’ bond holdings are positioned to collect those yields while still benefiting if rates eventually fall. We’re not betting on when that happens. We don’t need to.
The question behind the question
Most of what we watch boils down to one thing: is a recession coming? The indicators we track ticked up slightly this month but remain some way below the level at which we’d act. So the portfolios stay balanced, leaning neither towards caution nor towards risk. If that changes, you’ll hear about it from us before you read about it anywhere else.
What changed at this meeting
Nothing. We reviewed performance, which is where we’d want it to be. We looked at a couple of markets around the world that are becoming cheap enough to be interesting, and agreed the level at which we’d look harder. None has reached it. Watching is not the same as doing nothing. But it isn’t doing something either, and this month that’s the right place to be.
One year old next month
The funds reach their first anniversary in October. After our next committee meeting on 21 October we’ll be holding a client webinar to review the first year properly, and to look ahead to the budget, which lands the week after. We’d love you to join us. Details to follow.
Until then, a quiet month of the useful kind.
Next Investment Committee Meeting
Friday 16 October, followed by the client webinar.