Snow & Stockmarkets

It’s that time of year when snow is more likely and yesterday, given the weather warnings for our county, we all prepared for the worst. Some clients mentioned that they were buying extra food and made sure they had enough oil for their heating, whereas others mentioned that local schools might need to close.

That is what we do. When the prognosis is for bad weather, we prepare ourselves and take sensible action. No one wants to be the person featured on the news, stuck in snow drifts hours from home, without any warm clothes or supplies.

The weather forecasts, despite what we might sometimes think, are not based on guesswork, they relate to detailed analysis, carried out rigorously and monitored closely. I am not saying that they get it right all the time, but when extreme conditions are forecasted, I would suggest we would be short-sighted to ignore the warnings.

For me, there are many similarities with the stockmarket and the weather at this point.

The economic indicators are concerning. These are recessionary times; the global economy is so heavily in debt it is facing an uncertain future and the European position is a constantly evolving saga of woe. Yet despite all of this, stockmarkets are so chipper that they are shrugging off all the uncertainty and pushing forward. Does this mean we should also shrug off the concerns and blindly assume it is sunshine from now on?

For me, the threat of economic ‘snow’ is still so strong and will remain until perhaps March or April at the earliest, so I am still inclined to wait for more bad news. The detailed forecasts and analysis I run show a challenging time ahead and, rather than using guesswork, I will act on these and assume that more challenges await. If this happens you can wave good bye to the recent gains and more.

I am not prepared to have client’s assets slip or drift in this bad weather.