The world is going crazy – there is no denying it! And we are connected to it like no other time in history. Forget reading the morning papers or listening to the news bulletin on the radio on your way to work. We now have emails dropping into our inboxes at all hours of the day or night, markets that are open 24 hours a day, seven days a week, and newsfeeds that come to our phone relentlessly! It is hard to disconnect and switch off from all the noise that bombards us. As much as I would like to say that I spend time with my family and friends all weekend, I have to admit that I am a complete information junkie, and can’t help sneaking a peek at my X (Twitter) feed every now and then in the evenings, or on the weekend, or checking my finance app to see where the American markets are trading at 9pm at night!
Investing would be so much easier if there was no uncertainty!! This past weekend, we had the world’s shortest trade war! Trump announced that he would impose 25% tariffs on Canada and Mexico (which was a potentially huge story for the economy and markets), and if social media sentiment translated into market moves, we would have had a 1987-style crash on Monday morning! Crypto markets were collapsing, futures were falling, and currencies were moving all over the show! But it was all over before it started. Well, at least delayed for a month!
Unfortunately, uncertainty is a fact of life, and no one knows what is coming next! The hard part is that humans feel that they need to be in control, even if that control is an illusion. We have no control over what the next Fed move will be, what trade tariffs will be implemented, what economic growth or inflation will do, or what the stock market will return this year. Our reaction to uncontrollable events is what determines our success or failure as investors.
It is interesting that the launch of Deepseek, China’s low budget, high performing AI model, is being likened to the Sputnik moment in the 1960’s when the Americans realised that they were behind Russia in the space race. It ties in nicely to the following analogy:
In the 1970’s the American’s were planning further space flights to the moon after their successful moon landing in 1969. The common theme across the Apollo missions was the amount of planning that went into each flight. There were months and months of simulations and training to be prepared for every possible scenario that could happen. But as we know, there is always a risk of unplanned error, and it will always be something unforeseen, and unplanned for. When Apollo 13 had a mid-flight explosion, it wasn’t something that anyone could have predicted – the astronaut said, “if someone had thrown that at us in the simulator, we would have said, ‘come on, you’re not being realistic.’
That was why NASA trained astronauts in one skill more than any other: the art of not panicking. The only reason Apollo 13 could be turned around 200,000 miles from earth after an explosion on board, was because the astronauts on board and everyone on the ground remained level-headed; no one freaked out! Well at least they maintained their composure and if they were freaking out inside, they didn’t let it show!
Deepseek’s launch sent shockwaves through the western markets. OpenAI, Google, Microsoft and Meta are spending billions of dollars developing their AI models. In the process we’ve seen a surge in valuations within the semiconductor markets. China was able to launch Deepseek at a fraction of the cost, calling into question the validity of high valuations and general hype surrounding the big players in the AI / technology market.
So, the short and simple message this month is: Don’t freak out! The media will overreact, the politicians will overreact, social media will overreact, your friends and colleagues will overreact, but in investing, freaking out is not a strategy! Keep an eye on the basics, the things we’ve planned for and let the noise and chaos wash over you. If you can!
This comment is largely lifted from an article written by Ben Carlson on his blog, A Wealth of Common Sense. I have added my own spin here and there, but thanks to Ben for his inspiration!
Don’t Freak Out
The world is going crazy – there is no denying it! And we are connected to it like no other time in history. Forget reading the morning papers or listening to the news bulletin on the radio on your way to work. We now have emails dropping into our inboxes at all hours of the day or night, markets that are open 24 hours a day, seven days a week, and newsfeeds that come to our phone relentlessly! It is hard to disconnect and switch off from all the noise that bombards us. As much as I would like to say that I spend time with my family and friends all weekend, I have to admit that I am a complete information junkie, and can’t help sneaking a peek at my X (Twitter) feed every now and then in the evenings, or on the weekend, or checking my finance app to see where the American markets are trading at 9pm at night!
Investing would be so much easier if there was no uncertainty!! This past weekend, we had the world’s shortest trade war! Trump announced that he would impose 25% tariffs on Canada and Mexico (which was a potentially huge story for the economy and markets), and if social media sentiment translated into market moves, we would have had a 1987-style crash on Monday morning! Crypto markets were collapsing, futures were falling, and currencies were moving all over the show! But it was all over before it started. Well, at least delayed for a month!
Unfortunately, uncertainty is a fact of life, and no one knows what is coming next! The hard part is that humans feel that they need to be in control, even if that control is an illusion. We have no control over what the next Fed move will be, what trade tariffs will be implemented, what economic growth or inflation will do, or what the stock market will return this year. Our reaction to uncontrollable events is what determines our success or failure as investors.
It is interesting that the launch of Deepseek, China’s low budget, high performing AI model, is being likened to the Sputnik moment in the 1960’s when the Americans realised that they were behind Russia in the space race. It ties in nicely to the following analogy:
In the 1970’s the American’s were planning further space flights to the moon after their successful moon landing in 1969. The common theme across the Apollo missions was the amount of planning that went into each flight. There were months and months of simulations and training to be prepared for every possible scenario that could happen. But as we know, there is always a risk of unplanned error, and it will always be something unforeseen, and unplanned for. When Apollo 13 had a mid-flight explosion, it wasn’t something that anyone could have predicted – the astronaut said, “if someone had thrown that at us in the simulator, we would have said, ‘come on, you’re not being realistic.’
That was why NASA trained astronauts in one skill more than any other: the art of not panicking. The only reason Apollo 13 could be turned around 200,000 miles from earth after an explosion on board, was because the astronauts on board and everyone on the ground remained level-headed; no one freaked out! Well at least they maintained their composure and if they were freaking out inside, they didn’t let it show!
Deepseek’s launch sent shockwaves through the western markets. OpenAI, Google, Microsoft and Meta are spending billions of dollars developing their AI models. In the process we’ve seen a surge in valuations within the semiconductor markets. China was able to launch Deepseek at a fraction of the cost, calling into question the validity of high valuations and general hype surrounding the big players in the AI / technology market.
So, the short and simple message this month is: Don’t freak out! The media will overreact, the politicians will overreact, social media will overreact, your friends and colleagues will overreact, but in investing, freaking out is not a strategy! Keep an eye on the basics, the things we’ve planned for and let the noise and chaos wash over you. If you can!
This comment is largely lifted from an article written by Ben Carlson on his blog, A Wealth of Common Sense. I have added my own spin here and there, but thanks to Ben for his inspiration!
Asset Class Returns
The table below represents a rolling year view of the major asset class returns that we track. It offers a view of the asset classes we use to diversify your portfolio.