The end of one year and the beginning of a new one, which is a traditional time for looking back and looking forward.
Last January I commented that 2015 had given us a few surprises and that we could expect more of the same in 2016. I was correct in saying that we could expect some surprises but I didn’t expect them to be as big i.e. they were not surprises but shocks. The two major ones being the European referendum result (now known as Brexit) and the American Election result; Donald becomes president of the world’s largest economy on 20th of this month.
The stock markets started 2016 with big falls in January and February with shares falling about 10%, they recovered from this fall in March and things remained calm until June 23rd, when the shock referendum result hit the markets, in a span of a couple of weeks the markets were down by 5%, up by 5%, down by 5%, then up by 10% (all within one month). Thankfully the markets calmed down and have finished the year nearly 20% up since referendum day. Can you remember all the predictions of doom and gloom from the “so called experts” if we voted to leave Europe the opposite happened. Part of the gains (approx. 10%) are down to the “Trump effect” – “The Donald” causing another shock when he won the election in November.
The difficult part.
The government is due to trigger article 50 before the end of March, which will start the U.K. leaving the European Union. I believe that this will cause some problems as the rest of Europe, particularly Germany and France have a vested interest in making it difficult for us, because if our withdrawal is seen as a success other countries who are fed up with Europe will want to go the same way as us. France and Germany will be very difficult to deal with as they have elections this year and of course Greece is still “bust” closely followed by Italy and a few other countries.
There is a consensus among “the experts” that interest rates will go up in 2017. I am not convinced, they might go up a fraction but the people who set interest rates (governments) are the major beneficiaries of low rates and they are quite content for the savers to continue to subsidise the borrowers.
Ref the U.S.A. and Mr Trump – I don’t know what he will try and do, but hopefully the US Senate and congress will clip his wings regarding some of his more extreme policies, but as the USA is the world’s biggest economy we will feel the fall out or upside in the U.K.
The Acklam portfolios were all up during 2016. The low risk portfolio was up 4.76% (approx.). over the year and the low/medium risk portfolio was up 5.07% (approx). Compared with being 100% invested in shares these where poor returns but compared with receiving 1% for being invested in cash they were good returns.
The porftolio’s were invested on the cautious side in 2016 and will be in 2017 (things could change) as protecting capital is very important in the lower risk portfolios.
If you would like a re -assessment of your attitude to risk and/or your capacity for loss, please give us a call and make an appointment.
Again, all of us at Acklam Financial Limited wish you a healthy and prosperous New Year.
6th January 2017