A Calmer Week
The last week has been negative again for global equity markets with the US down nearly 4% and China and Hong Kong down over 5%. Europe has faired better down just over 1% with the UK being relatively flat but still negative over the week. In contrast our portfolios due to the actions that we have taken have over the last week either been flat or risen. Economic data is still strong but volatility is still high. If we were to be trading purely on data we would be invested, but this current period of negativity is as yet not over and the latest set of Inflation data out of the US points to increased rate rises and the facts that precipitated the sell off a week ago, still very relevant. As a result, we are holding cash whilst we evaluate and we are happy to keep waiting another week to try and evaluate how the value at risk scenario works through.
Our actions have therefore been wholly justified and we are evaluating the models and are looking to implement revised portfolios within the next week. Each portfolios in the new model will above OBI 4 hold varying degrees of cash with OBI 8 holding tactically 25% cash of which 23% will be actively traded into two passive instruments being the HSBC FTSE All World Index and HSBC European Index (ex UK) funds. As it stands today the cash in portfolios varies between 25% and 45% with OBI 8 having the highest cash allocation currently following the sales last week. We will invest into each instrument when we feel the value at risk scenario is positive. This means when we can see a balance between upside potential and downside risk. Today we see limited upside and unquantifiable downside and that explains why we are being cautious and significantly overweight in cash.
Despite our negativity due to behaviour and momentum we still see continued positive data which is positive and if anyone wants further data to substantiate the position please review the attached Global Economic News Document.
Model Portfolios & Indices
All of our portfolios have exceed benchmarks over all time periods and we continue to monitor and cyclically adjust the portfolios to balance out the delivery of outcomes with the preservation of capital.
The data above will not directly correlate to the indices as there is always a delay in pricing because the US markets close significantly later than the European markets and the Asian markets. The data set above reflects the last close and much of the days movements will not yet be reflected in the portfolios due to pricing delays. You cannot therefore directly correlate indices to the portfolios. The value of investments may fluctuate in price or value and you may get back less than the amount originally invested. Past performance is not a guarantee of future performance. Performance figures quoted include the fund manager charges but exclude other fees such as adviser, custodian, switch and/or discretionary investment management fees. Unless otherwise instructed and accrued, income is reinvested into the portfolio.
This Day in History
On February 14 around the year 278 A.D., Valentine, a holy priest in Rome in the days of Emperor Claudius II, was executed. Under the rule of Claudius the Cruel, Rome was involved in many unpopular and bloody campaigns. The emperor had to maintain a strong army, but was having a difficult time getting soldiers to join his military leagues. Claudius believed that Roman men were unwilling to join the army because of their strong attachment to their wives and families. To get rid of the problem, Claudius banned all marriages and engagements in Rome. Valentine, realizing the injustice of the decree, defied Claudius and continued to perform marriages for young lovers in secret. When Valentine’s actions were discovered, Claudius ordered that he be put to death. Valentine was arrested and dragged before the Prefect of Rome, who condemned him to be beaten to death with clubs and to have his head cut off. The sentence was carried out on February 14, on or about the year 270. Legend also has it that while in jail, St. Valentine left a farewell note for the jailer’s daughter, who had become his friend, and signed it “From Your Valentine.”
For his great service, Valentine was named a saint after his death. In truth, the exact origins and identity of St. Valentine are unclear. According to the Catholic Encyclopaedia, “At least three different Saint Valentines, all of them martyrs, are mentioned in the early martyrologues under the date of 14 February.” One was a priest in Rome, the second one was a bishop of Interamna (now Terni, Italy) and the third St. Valentine was a martyr in the Roman province of Africa. Legends vary on how the martyr’s name became connected with romance. The date of his death may have become mingled with the Feast of Lupercalia, a pagan festival of love. On these occasions, the names of young women were placed in a box, from which they were drawn by the men as chance directed. In 496 AD, Pope Gelasius decided to put an end to the Feast of Lupercalia, and he declared that February 14 be celebrated as St Valentine’s Day.
Gradually, February 14 became a date for exchanging love messages, poems and simple gifts such as flowers.
As always have a wonderful week and stay safe.
Jason Stather-Lodge CFP, MCSI, APFS
CEO & Founder
Chartered & Certified Financial Planner
Chartered Wealth Manager