23 December 2020
For my final newsletter I wanted to recap a lot of the teachings I have learned this year as a way to instill this in what has been a truly transformational year in so many years. Whilst as a family we have been very fortunate to avoid both the virus (we think) and the financial/social implications, I know that many people haven’t been nearly as lucky.
My original title to this piece was “What 2020 has taught us” but then I changed it because, for this particular year, there really wasn’t an “us”. Yes, there was an increased sense of local community and “we’re all in this together” but everybody has experienced 2020 in their own totally different ways given the situation they are in. As a consequence we all have had to go through this year just working out how we can continue a somewhat normal life with all the scares and restrictions around us. I cannot imagine how it has been if you have an elderly relative in a care home and others I’m sure cannot imagine what is what like to home school 2 children with a baby crawling around.
So these are some of the things that I have learned over 2020 which I will be taking forward with me.
- The need to accept volatility and uncertainty in all aspects of our lives.
“This is the root of magic and science, life’s response to uncertainties. Magic runs to the beginnings of life because life is a gift and uncertain.”
― Loren Eiseley, Notes Of An Alchemist
This was easily the biggest lesson and one which I actually thought I was already comfortable with – but was proven wrong. Working in financial markets for your whole career tends to instill a certain comfort level with volatility but that was not just tested but almost broken this year. I think back to April when it was announced Boris Johnson was in intensive care and the country as a whole held their breath. From an investment point of view, I think back to March when I saw cautiously managed, relatively low-risk funds drop almost 20% in one month it was a real shock to the system. That shouldn’t happen… yet it did. Change is the only consistent factor. Let’s breathe and accept and see what happens tomorrow.
- The importance of protecting my family.
“Our most basic instinct is not for survival but for family.”
― Paul Pearsall
Hardly a revelation but more a re-enforcement. Again I think back to February and March as the hospitals were filling up and the true nature of this horrible virus became apparent. Everyone at that point must have felt like me – shocked, concerned and vulnerable. What would happen to my family if I got this? How would they cope? What would they do? All horrible feelings that you just want to go away. So how did I reconcile that in my own mind? I created a list of all my accounts and left it somewhere safe. Our made sure our will was up-to-date. And finally, I made sure that if the worse was to happen, my wife and family would receive a bigger cheque than before. It’s not going to bring me back, but it’s a lot better than not having it!
- The benefits of conversation and a local community
“No road is long with good company.”
― Turkish Proverb
I was surprised how much of an impact being house-bound had on me. And it was only as lockdown was relaxed over the summer that I realised. The simple pleasure of sitting outside in a beer garden catching up with friends was remarkable. Also the fact that we didn’t go further than half a mile away from our front door for nearly 6 months meant that we built relationships with our school community and neighbours far easier and faster than we would have otherwise. And that will continue into the future now. I’m sure everyone has their own stories, but we are lucky to live near the Thames. In the summer I’ve never seen so many people on boats, paddleboards, swimming (yes, swimming) as the local community discovered all these amazing local resources on our doorstep.
From a work perspective, I tried to make sure I spoke to as many clients as possible during this time. As I mentioned above, we saw some market moves that simply shouldn’t have happened and I felt it important for people to see and hear what I thought and try to help with explaining what was happening. This seemingly was appreciated.
- The benefits of investing for growth both in markets and personally.
“Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”
― Red Queen from Alice’s Adventures in Wonderland
In hindsight, perhaps 2020 wasn’t the best year to start a new company. But at the same time, actually it was. We definitely saw a decrease in new enquiries this year as people had a lot of other things to think about, but this gave us a huge chance to completely revamp the business and focus internally. I’m thrilled to say we’ve done this and I’m really proud of what we’ve achieved. You may have noticed some changes already with the reviews, but more will come out over the year. We’re really excited and will be opening the doors to new enquiries again in the New Year.
In markets, we have seen a spectacular recovery post the March lows in growth-focused assets. Yes, there is the impact of liquidity being flooded into the markets from central banks however the liquidity has to find a home in the chosen assets – it doesn’t just get distributed randomly. With the online world becoming even more important and cloud computing, electric cars and software-as-service companies taking off, we have seen an enormous rally in some of these stocks. My big fear is that there will be a huge divergence in performance between the portfolios that harness this growth and the more defensive portfolios. We are reviewing all our portfolio recommendations and will be discussing these with you at your reviews to see if this is relevant for you – I think it is.
- The importance of having a safety net
“The danger which is least expected soonest comes to us.”
This is the other side of designing a life or portfolio for growth. The need to have a real, accessible-at-all-times safety net in place. For me, this is family and home. For others its friends and community. For others it’s £100,000 sitting in cash. It’s all relative to your situation. As anyone who catches a train regularly knows, if a system designed for maximum efficiency suddenly experiences something outside expectations then it all completely goes to pot because there is no slack in the system. Having slack is vital because, referring back to point 1, uncertainty and unexpected events should not be unexpected at all. They will always happen, we just won’t know what they look like before they do.
So that’s my 5 big lessons for this year. Perhaps some of them resonated with you as well. I want to thank you for reading over the last 12 months and as we approach 2021 with optimism and hope, I want to wish all of you a Merry Christmas and Happy New Year.