‘Exercise caution in your business affairs, for the world is full of trickery..’ Thoughts of Saltydog Investor

“Exercise caution in your business affairs, for the world is full of trickery. But let this not blind you to what virtue there is; many persons strive for high ideals, and everywhere life is full of heroism.”

This is just one of the maxims from the Desiderata written by Max Ehrmann in 1927.

It seems particularly poignant for the coronavirus situation that we find ourselves in today; this is not business as usual.

In investment and financial terms life must appear very dark to many people, and for some just being able to put food on the table must be a challenge.

The media is not always helpful, seemingly only being able to see the hole and never the doughnut, but nevertheless, countless stories are emerging of heroism and compassion for others, in particular for the ill, the elderly and the needy.

‘I do not believe that anybody knows what the markets are going to do tomorrow, let alone next week or next year’

What to do next for our investments is a big current question?

I do not believe that anybody knows what the markets are going to do tomorrow, let alone next week or next year.

Personally, due to this uncertainty I will still hold a large percentage of my portfolio in cash, just in case there is a second fall. There is still an enormous potential for turmoil in the markets during this recovery period, so it just makes me feel more comfortable.

Looking at graphs of the various world markets since the February crash, there does appear to be one notable anomaly that is worth observation.

All the markets plummeted, only to recover slightly, and then level off approximately 20% below their previous peaks.

This is not the case with the two technology markets, the Nasdaq and the Techmark, which also fell but have since continued to rise steadily and are now moving towards a pre-crash level.

As a confirmation of this, our twelve-week Saltydog numbers and graphs show technology and biotech funds moving back towards break-even, and they’re nearly all showing reasonable gains over twenty-six weeks.

‘technology and biotech funds moving back towards break-even’

My reduced investment portfolio is now again holding some of my old favourite funds, AXA Framlington Global Technology, Polar Capital Global Technology, and AXA Framlington Biotech.

I do not profess to understand why the FANG companies are still allowed to command such astronomical p.e. values, but for the moment they do, and that is good enough for me to stay invested in this technology sector.

Another observation is on the positive performance of gold bullion and gold funds when the world’s economies have been under great stress.

‘the recent top five funds in the specialist group are all gold funds’

Such as after The Great Depression, the end of the Vietnam War, and the 2008/9 World Financial Crash, when the value of gold, and gold funds, soared to new highs.

The present Coronavirus Pandemic will surely rate alongside these previous catastrophes, so we should perhaps expect a similar performance from these funds.

In fact, looking again at last week’s Saltydog numbers, the recent top five funds in the specialist group are all gold funds.

I have held a small percentage of my portfolios in Investec Global Gold for many years and increased that holding two weeks ago.

The final area that has my full attention is the “Greta Green” arena of sustainability.

This has been discussed in previous articles and it seems to make sense to have a toe in this particular camp. There is evidence all around us that the future of mankind and the world is being put at risk by today’s way of living.

‘the future of mankind and the world is being put at risk by today’s way of living’

Last year we saw that the funds investing into businesses identified as “green” were performing well. The Saltydog reports recorded returns in excess of 20% per annum.

After the corona pandemic this trend is likely to accelerate, so the Liontrust Sustainable Future Managed, Royal London Sustainable World, and Janus Henderson Institutional Global Responsible Managed funds will also remain in my portfolio.

My wife and I have been taking a turn around the village every day to comply with Boris’s rules for exercise.

When being approached by couples circulating in the opposite direction, it is amusing to see how we both adopt a “dosey doe” half-curtsy, half-bow square dance approach to each other.

One couple in order to comply with the distancing rules, then moves to the centre of the road risking their lives to the hands of the silent assassin in the electric car. It has certainly become a new way of living.

Best wishes and good investing,
Douglas.
Founder & Chairman

P.S Over the years I have been asked to contribute to the free ‘DIY Investor Magazine’ several times. We feature in their latest edition, which is available at www.diyinvestormagazine.com, along with many other articles that may be of interest to anyone who believes in taking a hands-on approach to their investments.