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What should you do when Investment Markets are Screaming!?




You’ll have no doubt seen all the noise in the media about what investment markets are doing. Indeed, we live in remarkable times. However, we at Melville Independent want to spell out our thinking.


When examining the latest ups and downs, it’s worth pointing out there are an awful lot of very smart, determined people working in financial services, the collective knowledge of which is unfathomable. But there are things that even our advisers at Melville Independent, with their wealth of knowledge, can’t and won’t ever know. We tend to simply park this as the ‘unknowable’, because dealing with such uncertainty is incredibly difficult. It is a large reason why fear and greed have a habit of exaggerating investment market cycles.


Let’s put this into context.


Some things are known, for example:


  • current valuations in a lot of markets are high (or overpriced) and

  • bonds tend to be ‘lower risk’ than equities during turmoil.

These are quite consensual.


However, equally, there are many ‘unknowable’s’ in markets (e.g. politics, Partygate, Putin, Tsunamis (Covid or otherwise), etc), which are notoriously unpredictable and the reason why we often use Morningstar’s risked rated portfolios.

With risked rated portfolios, we can spread our investment eggs into different baskets. Putting it another way, we understand that it is likely that noise decibels will vary and would increase at some point, partly due to investment logic and partly influenced by unforeseen developments, and we can plan ahead for this, if and when it eventually happens, like just now.


So, what does all this mean for your current investments? Ultimately, we are unlikely to recommend any specific action for currently held investment, at the moment. Melville Independent discuss clients’ long-term goals at length and create plans to help us reach those goals together.


While noise and speculation can act as emotional rollercoasters, your goals are unlikely to materially change in the short term and, therefore, your plans shouldn’t either. The investment philosophy adopted throughout Morningstar’s risked rated portfolios involves them in buying assets they have reason to believe are undervalued and this setup will help support your plans in the long term. Moreover, we remain confident in the strategy because it involves a solid and well-reasoned way to invest. It all comes down to knowing what we can and being best prepared to stay the course amid the ‘unknowable’s’. We certainly won’t be hitting the panic button and would hope our clients won’t either.


Put your earphones on and look beyond the short term.


To explore how Melville Independent can help you, please get in touch by contacting our Office Manager, Graeme Morrison at Graeme@mi-plc.co.uk.


The article is for information only and must not be considered as financial advice. We always recommend that you seek financial advice before making any financial decisions.


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