Phew what a relief! We are still here…
Unlike last summer, when it seemed that the world might fall apart and stock markets collapsed by 20% (on the basis of some useless comments from a credit rating agency that the US had a debt problem!) this summer has been relatively benign.
Why this has been we shall never know but as we head into Autumn we shall be entering the season of storms and not necessarily just the meteorological ones.
Time will tell if the European Central Bank’s (ECB) new bond-buying plans will ease Europe’s debt crisis but the early signs are positive. Whatever happens the message for investors remains the same.
Relying on forecasting, particularly about the future, is a fool’s errand! Actual events have a way of making a fool of your assumptions.
The second thing is you don’t really need forecasts to succeed as an investor. Staying diversified both across and within asset classes provides a cushion in down times and ensures you are still positioned to reap returns when riskier assets come back into demand.
The third is that the past has gone. When news is gloomy, that information is already in the price. It’s human to feel anxious about bad news because we fear loss more than we like gains.
So whatever happens over the coming months nothing lasts forever. In fact, of all the forecasts ever made, the only one really worth counting on is that things change. What’s more they often change in ways we least expect.