{"id":7694,"date":"2022-02-23T17:00:14","date_gmt":"2022-02-23T17:00:14","guid":{"rendered":"https:\/\/www.boosst.financial\/insights\/?p=7694"},"modified":"2022-02-23T17:00:14","modified_gmt":"2022-02-23T17:00:14","slug":"uncertainty-everywhere-you-can-be-sure-of-it","status":"publish","type":"post","link":"https:\/\/www.boosst.financial\/insights\/uncertainty-everywhere-you-can-be-sure-of-it\/","title":{"rendered":"‘Uncertainty Everywhere’ – you can be sure of it!"},"content":{"rendered":"\r\n

Today, it certainly feels like the world is in a very uncertain place. Authoritarian states are flexing their muscles, with the Russian army crossing the Ukrainian border and China\u2019s ongoing subjugation of Hong Kong with the new National Security Law as cases in point.<\/span><\/p>\r\n

The West continues to struggle with what is hopefully the back-end of the pandemic as populations build immunity through vaccination and infection.\u00a0\u00a0<\/span>Economically, the greatest challenge is soaring inflation, hitting levels not seen for several decades.\u00a0 <\/span>As a result, interest rates and yields on bonds have started to rise and global equity markets have just fallen a little.\u00a0 <\/span>This can all feel very gloomy and unsettling.<\/span><\/p>\r\n

It is very ‘human’ to feel that the present is more uncertain than the past.\u00a0 We all do it.\u00a0<\/span><\/strong>We have all but forgotten the crisis scenarios of events such as the Y2K software bug issues of 2000 (planes expected to fall out of the sky, nuclear power stations to be out of control etc.), the emotional and geopolitical impact of 9\/11, or the fear that many felt in 2008 when a meltdown of the financial system was a very real possibility.<\/span><\/p>\r\n

The chart below reminds us that over the mid-to-longer term the markets absorb the consequences of such events and power forwards as capitalism drives the relentless pursuit of profit opportunities. Being shaken out of markets based on today\u2019s news is about the worst mistake any long-term investor can make.\u00a0<\/span><\/span><\/p>\r\n

Material global events come around like a revolving door…<\/b><\/span>\"\"<\/a><\/p>\r\n

What is to be done?<\/b><\/span><\/h5>\r\n

The short answer is \u2018not much\u2019. There is nothing that you or we know about the global economy which hasn’t already been considered by the wider market and reflected in today’s prices. For sure, new news will have an influence on those prices, but by its very definition this is a random process that is hard to benefit from unless you own a reliable crystal ball.\u00a0<\/span><\/p>\r\n

In terms of direct portfolio exposure it is worth noting that Russia represents around 0.35% of global equity markets, and that is before this is diluted down in any portfolio by bond holdings. To put this in perspective, the global market weight of Apple is over 4%! In fact, Apple\u2019s cash reserves alone broadly equivalent to Russia\u2019s entire market capitalisation.<\/p>\r\n

No-one has any real idea as to the wider impact of a Russian invasion, and even if markets fall, you need to ask yourself the following:<\/p>\r\n