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THE TOP CLASS WEDNESDAY UPDATE DOESN’T EVEN HAVE A SNIFFLE

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Well, here we are and maybe this is how it all ends – not with a bang, but with a flurry of 10% drop portfolio warnings. If only we’d all washed our hands more. And to the guy at the conference last week who was sneezing openly all over the row in front, wherein I happened to be sat, I forgive you.

So didja buy the dip, didja? Didja? No, you didn’t, and neither did any of your clients, and I’m guessing that most clients are now well schooled enough not to even phone up to ask whether now is the time to get in or, indeed, out.

Now’s as good a time as any to dust off the time-in-the-market-not-timing-the-market sales aid that I seem to recall having in the old laminated folder back in my tied adviser days. Ah, a prelapsarian time when Framlington NetNet, ex-post disclosure and online client portals were the stuff of a madman’s dreams. Anything seemed possible.

I read a really interesting piece from an American CFA, Michael Batnick, who writes a great column called The Irrelevant Investor, this week. You can find it here. He back-tests to what happens when you buy the dip as opposed to remaining fully invested, and…well, you get the rest.

I also read a similarly interesting piece from a major D2C platform which serves active traders. Half of its customers are doing nothing. A third are buying the dip. 10% have run for cash and 2% for bonds or gold. I guess we’ll never know, but what an amazing research case study that split would make. And if it is true that masterly inactivity is the best course of action – which I think most folk reading this believe – then we’re entering into a sort of 3D live mathematical proof. Russell Crowe can’t be far away. Pool tables may be involved.

If a potentially big dip like this is a great chance to demonstrate the real-time value of advice in terms of managing behaviours, it’s also a great time to study how risk-banded portfolios behave. We should see portfolios further down the risk spectrum experience less of a drawdown than their fuller-fat siblings.

It’s too soon to say anything yet, but I note that Vanguard Lifestrategy 40 was down 3.25%, 60 was down 5.5% and 80 was down 7.5%, all between February 20 and February 28. A tiny reference period and a sample of one with a very particular approach – but if, when the dust settles and the hog emerges, blinking, out of the tunnel once more, we find that everything behaved as it was meant to, that will help too.

Which won’t mean much to those on the wrong end of Covid-19. Time to remember how much what we all do here matters next to nurses, doctors and others with real, proper jobs.

THE LINKS CANNOT BE STOPPED

  • We’re a few weeks on since the launch of Platform Analyser, and it’s been quite a ride. We’ve been squishing post-launch bugs enthusiastically, and now we’ve got enough of the wee blighters gone, we’re heading into our first big post-launch development, which will be bespoke pricing. So you’ll soon be able to pop any special deals you’ve got into Analyser and play with those. Hours of fun, etc. If you haven’t had a look we’d love to see you at the Platform Analyser homepage. Or even if you have, do come again. It’s not rationed or anything.
  • Citywire / NMA has done a big platforms special which is worth a read. Someone has been borrowing their Dad’s Pink Floyd records.
  • Further M&A activity to report, with Morningstar taking Finametrica and its parent, PlanPlus Global (disclosure: PPG is a client of ours). It’s far from boring out there…
  • And your music choice this week celebrates the fact that Master of Puppets by Metallica is 34 years old today (or yesterday when you read this). 34 is also the age that I was when the lang kitten v1.0 was born, so it’s all linked, maybe. Anyway, here’s a live version from 1989, sadly post-Cliff but still from the days when ‘Tallica were good.

See you next week, probably. Oh, and wash your hands.

Mark

Posted in: #Top Class Wednesday Update  

About Mark Polson

lang cat founder and boss. Expert on all things platforms, pensions and investments. Prolific writer and public speaker, even when people ask him not to be. Knows more about Scandinavian black metal than you, and isn't afraid to prove it.

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