Fisher Investments UK

Today

2 Jun 2020
Fisher Investments UK

To Pool Eurozone Debt or Not? Coronavirus Edition

With countries gradually reopening from COVID-19 lockdowns, governments’ focus seems to be shifting from what measures they should take to curtail the virus’s spread to how to respond to the economic impact of said measures. In the eurozone, some have proposed a long-debated measure as a potential solution: pooled sovereign debt (also known as collectivising or mutualising it)—a concept we will explain in further detail below. Most recently, Germany—long against the notion of sharing debt with other eurozone countries—and France announced they would bless the issuance of €500 billion in joint EU debt to help member-states fund their coronavirus responses. Whilst it is uncertain if the European Commission (EC) and all other member-states will agree to such a proposal, we think investors would benefit from understanding the debate over this long-running political issue—and seeing why it isn’t likely to go away regardless of how the current situation plays out.

To Pool Eurozone Debt or Not? Coronavirus Edition

Monday

18 May 2020
Fisher Investments UK

Common retirement investing mistakes

Investors face a real challenge in managing their investments through what is hopefully a long, happy and comfortable retirement. Today, many can expect a retirement of 30 years or more—that means needing your money to work for you for at least that long. If you’re hoping to leave money to a spouse, heir or charitable cause, you’ll need your money to last even longer. Needless to say, the stakes are high. We’ve helped thousands of individuals and families plan for a comfortable retirement, so we know the quality of your retirement depends, in part, on the investment decisions you make today and over the coming years. Below we discuss some of the most common retirement investing mistakes so you can avoid them and plan better for the long term.

Common retirement investing mistakes

Tuesday

28 Apr 2020
Fisher Investments UK

What to Expect When the Bear Ends

When fallout from COVID-19’s global spread walloped equities in February and March, financial news coverage showed sentiment—investor and otherwise—plunged. Headlines keyed first on contagion stats and death rates, then on the massive economic impact of worldwide business shutdowns. Fear appeared pervasive—and, in our view, it will likely remain so for some time. The good news: Equities don’t need fear to recede in order to rise, in our experience. Our analysis shows they typically begin to climb higher amid widespread dread. Fisher Investments UK thinks being aware of the fears that typically recur early in a recovery can help investors keep an even keel—and not miss the strong gains that typically arrive early in bull markets (long periods of generally rising equity prices).

What to Expect When the Bear Ends

Thursday

16 Apr 2020
Fisher Investments UK

A primer on fixed-interest risks

When equity markets get extremely rocky—as they have no doubt been since mid-February—many investors often seek what they perceive to be safe assets. In our experience, many equate this with fixed-interest securities. In the short term, fixed-interest securities typically see less price volatility than equities—a potentially attractive quality when shares are gyrating. Whilst the ability to dampen volatility in equity portions’ of investors’ portfolios is a useful feature, especially today, we think some take it too far, viewing fixed interest as inherently safe and equities as inherently risky. In our experience, volatile times bolster this perception. But volatility isn’t the only risk investors should consider, in our view—and fixed interest presents a few of its own worth weighing.

A primer on fixed-interest risks

Tuesday

3 Mar 2020
Fisher Investments UK

Understanding Volatility’s Role in Your Portfolio

It’s no secret many investors struggle with market volatility. But volatility can actually be your best friend. When many people think about volatility, they imagine stock market corrections and steep market declines. In reality, volatility is a two-way street. Volatility to the upside is just as significant and helps drive stocks’ long-term rise. You probably like volatility when it’s to the upside (although you probably don’t think of it as “volatility”) and you probably hate the downside variety. Here’s another example. Many investors exclaim their disdain for equities after a downturn, but these same people have huge appetites for shares during a roaring bull market. This is classic myopic loss aversion—the tendency for investors to feel the pain from investment losses much more than they feel joy from gains.

Understanding Volatility’s Role in Your Portfolio

Monday

13 Jan 2020
Fisher Investments UK

A New Year Portfolio Check-In Guide

With 2020 upon us, many investors may be reviewing their portfolio’s 2019 path and mulling over possible adjustments for this year. If you are one of them, here are some factors we think are worth considering. 1. Review your asset allocation—the mix of equities, fixed interest securities, cash or other securities in your portfolio. If you have multiple investment accounts, we suggest doing this for each to arrive at your overall asset allocation. For those owning equity or fixed interest funds, note that their contents might not be apparent from their name (e.g., “Balanced Growth”). Perhaps examine the individual securities they contain to see what asset category (or categories) they belong to. If this information isn’t already included in the statements the fund provider sends you periodically, you should be able to contact them and request it.

A New Year Portfolio Check-In Guide

Wednesday

27 Nov 2019
Fisher Investments UK

Average Returns Aren’t Normal

When Fisher Investments UK looks back through history, we note many Ponzi schemes and investing scams have this in common:  They promise steady, positive returns that are close to the 10% historic average annual return of equities—as measured by the S&P 500 Index.[i] The siren song of smooth, positive returns with limited volatility can be hard to resist. Wouldn’t it be great to grow your assets predictably, with no unforeseen or uncomfortable dips in value? The only problem is that this is too good to be true. “Average” market returns simply aren’t that normal. Before providing more evidence about the rarity of “average” returns—a brief warning. You may recall Bernie Madoff lured investors with the promise of steady, positive returns.

Average Returns Aren’t Normal

Thursday

10 Oct 2019
Fisher Investments UK

Why Ken Fisher thinks Brexiting should be bullish

For the better part of the past year, Ken Fisher (founder of Fisher Investments Worldwide) has preached a simple message to readers of his global market commentary: The sooner Brexit happens, the better off the UK’s economy and equity markets will be. Perhaps counter-intuitively, the recent run of dreary economic data helps explain why. As a general rule, equity markets hate rising uncertainty and love falling uncertainty. Elevated uncertainty discourages risk-taking, which harms investment. Think like a business leader—one of Ken Fisher’s favourite tactics to assess the economic impact of policy changes and this becomes clear. Many business projects are long-term in nature. The payoff might not come for years down the line.

Why Ken Fisher thinks Brexiting should be bullish

Thursday

3 Oct 2019
Fisher Investments UK

Are fixed interest securities safer than equities?

In the world of investing, fixed interest is often associated with being a “safe” investment option. After all, the name fixed interest implies the income you receive is a “fixed” amount. This school of thought often leads investors who have long-term growth needs to forgo potentially better growth opportunities for what they consider to be safer investment options. But just how safe are fixed interest securities? The answer depends on your definition of “safe.” Does your definition of safe mean a higher probability of low short-term volatility? If so, you could consider fixed interest a safe option. But if your definition of safe means increasing the probability of growing your retirement portfolio enough to support your income needs in retirement, fixed interest might not be your best option.

Are fixed interest securities safer than equities?

Friday

6 Sep 2019
Fisher Investments UK

Age isn’t everything in retirement planning

Age is just a number. Whilst it’s certainly not a meaningless number, when it comes to your investment asset allocation decisions, it shouldn’t be the only factor you consider. Asset allocation is the mix of equities, fixed interest securities, cash and other securities that makes up your investment portfolio. Selecting the appropriate asset allocation mix for your portfolio is an important decision to make, and different investment managers, financial professionals and individuals may have varying methods on determining it. A popular method is based on your age. Some might suggest subtracting your current age from another number (such as 100) to determine what percentage of your portfolio you should have in equites.

Age isn’t everything in retirement planning

Tuesday

6 Aug 2019
Fisher Investments UK

To avoid unpleasant fund surprises, know what you own

Editors’ note: Following the publication of this article, H2O Asset Management contacted us to challenge the financial media’s characterization of this saga, including some of the sources we used, and stressed that they did not gate the funds in question. We have amended our text to clarify that the firm introduced its policy of swing pricing in 2017, and we are providing both sides of this story as a way to highlight the importance of analyzing funds’ redemption rules yourself. Do you know how easy—or hard—it is to redeem your fund investments for cash? We think you should. In our view, difficulties redeeming funds in three high-profile cases underscore the importance of carefully considering liquidity—how quickly and easily you can redeem your investment for cash without affecting pricing.

To avoid unpleasant fund surprises, know what you own

Wednesday

3 Jul 2019
Fisher Investments UK

Don’t Fear Equity Heights

Have you ever seen a headline saying equity markets are “too high”? Or that a market fall is right around the corner due to overvalued equities, or “dangerous” all-time highs? Some investors fear that equities reaching new heights means a downturn is right around the corner. Although acrophobia—the fear of heights—may have been a useful human behaviour in the past when it came to staying physically safe from falling off actual cliffs and the like, the intuition involved does not directly apply to equity markets and their heights. Before judging the effect of “too high” equity prices, first you must use an appropriate framework. Sometimes fears of market highs come from not scaling historical market performance correctly.

Don’t Fear Equity Heights

Friday

7 Jun 2019
Fisher Investments UK

Look Beyond Interest and Dividends to Generate Cash Flow

Many investors, whether retired or not, rely on cash from their investment portfolios at some point. This can be entirely appropriate and a great way to put your wealth to work. What is unfortunate, however, is that many investors assume that to generate this cash flow they need a portfolio full of dividend-paying equities or interest-bearing fixed interest investments. Whilst this sort of portfolio will produce regular cash flow, it may also leave you impoverished, if you’re not careful. Of course, realising regular income from dividends and fixed interest investments sounds great. And it can be an appropriate strategy for a portion of your portfolio. But as a strategy for the bulk of your investable assets, it may well be less appealing because, even though it sounds as safe as can be, it comes with a number of risks.

Look Beyond Interest and Dividends to Generate Cash Flow

Thursday

9 May 2019
Fisher Investments UK

Instincts and Investments

Instincts are part of being human. Whether helpful or not, our instincts creep their way into our daily decision-making process. Unfortunately, investing decisions are no different. Why “unfortunate”? Our instincts often work against us in investing. You may hear your peers mention they just “knew” Equity X would fall 15%. We hear these stories all the time when instincts led us to make the right decision. Or we “knew” something bad would happen and we made a mistake by not listening to our instincts. At least that’s how we remember it. However, these beliefs are almost always tricks your brain is playing on you. Behavioural finance is a school of behavioural psychology dedicated to understanding how our brain has evolved in the way we make day-to-day decisions.

Instincts and Investments

Monday

29 Apr 2019
Fisher Investments UK

Who Can Invest Passively?

At first glance, investing passively may seem easy. Pick a low-cost fund or funds  reflecting a broad market index then hold it forever and watch your money grow. The idea behind passive investing makes sense. As long as you don’t touch the money invested, your returns will mimic those of the index minus any fees—which tend to be small for these types of funds. Over long periods, market returns have been pretty good! Unfortunately, most people don’t actually achieve these types of market like returns because not touching the money is a lot harder psychologically than most folks appreciate. True passive investors—those that can sleep soundly at night despite all the ups and downs of the market—are rare. Why? We’re human! Humans have emotions, and unbridled emotions can get in the way of being a disciplined investor.

Who Can Invest Passively?

Monday

25 Mar 2019
Fisher Investments UK

Want to Invest Better? Own the World

If you read magazines, watch the news or even just log on to social media, you may see a common theme: the world is more interconnected than ever before. However, this isn’t a new phenomenon. As every decade in modern history passes, the world continuously grows closer—economically speaking. Unfortunately, many investors are just beginning to understand the effects. And even though they acknowledge it, some still ignore investments outside of their home countries. This means many investors are missing out on some of the best investing opportunities in the world. One reason some investors fail to invest globally is they perceive foreign stocks are riskier than domestic stocks. There’s an inherent fear of the “unknown.

Want to Invest Better? Own the World

Thursday

28 Feb 2019
Fisher Investments UK

Some Retirement Investing Do’s and Don’ts

No matter your level of sophistication, we think there is a common thread amongst investors: They are all fallible humans. Whilst no one can ensure they will make no retirement investing errors, there are some basic points we think investors should revisit from time to time—a few “do’s and don’ts.” Here we group some under three broad categories—budgeting, time horizon and diversification. Budgeting: Building a nest egg takes discipline. Do save. Telling would-be retirees they should save is perhaps the most basic financial advice in the world. But without saving, you won’t have anything to invest. The key is to start as early as possible and do as much as feasible. Starting early puts time on your side. This allows compound growth—growth of principal and earlier growth that builds over time—to work in your favour.

Some Retirement Investing Do’s and Don’ts

Tuesday

22 Jan 2019
Fisher Investments UK

The Myth of Market Certainties

“Equities seem so uncertain now. I’ll just wait until the market settles down—then I’ll make a move.” Many investors may think this statement makes sense at first—waiting until market volatility settles, or a correction or bear market recovers before putting your money into equities. But what exactly is the sign investors are waiting for? If you’re waiting for a clear sign that volatility in equities has subsided and will start appreciating in neat, steady steps, you may end up waiting forever. Equities are volatile by nature, and even their volatility can be volatile. It’s the volatility and risk that enables equity returns to grow the way they historically have. To get lower shorter-term volatility, you’d have to expect lower longer-term returns.

The Myth of Market Certainties

Tuesday

18 Dec 2018
Fisher Investments UK

Year-end reminder: You can’t buy past returns

As the year winds down, we approach the season when some investors do an annual portfolio review. Checking in on your investments, whether annually or at some other interval of your choosing, can be quite helpful, in our view. However, we suspect doing so can lead to the temptation to rearrange investments based on the past year’s performance, which may not be a wise long-term move. We think investors are best served to approach an evaluation by assessing whether their overall strategy is in line with their long-term goals, cash flow needs, risk tolerance and time horizon (or the length of time your assets must be invested to keep working toward your goals) — not by dwelling on which categories of shares did best and worst.

Year-end reminder: You can’t buy past returns

Friday

16 Nov 2018
Fisher Investments UK

Why the Eurozone Economy Shouldn’t Mind Draghi’s Departure

Mario Draghi’s term as head of the European Central Bank (ECB) doesn’t end until next October, but we are already finding financial media fretting over who will replace him. Meanwhile, some investors wonder how Draghi’s replacement will manage eurozone monetary policy. Will the eurozone be weaker after the ECB chief who promised to do “whatever it takes” to save it saying goodbye? In a related story out of the UK, coverage recently seemed relieved after Bank of England (BoE) Governor Mark Carney agreed to stay on through January 2020, as many observers seemed to fear an earlier exit might imperil the economy during a potentially tumultuous Brexit process. In our view, neither of these events is as impactful as coverage frequently portrays.

Why the Eurozone Economy Shouldn’t Mind Draghi’s Departure

Friday

12 Oct 2018
Fisher Investments UK

Risks Aren’t Only for Equities

In our experience, we find many investors approach choosing securities based on odd criteria—like perceptions of safety from risk. A common presumption we have encountered in this vein: Equities are risky because their prices tend to swing, sometimes a lot, in the short term. Investors often presume debt securities are safe because their prices tend to move less. Whilst equities are more volatile than some fixed-interest securities in the short run, we think conflating the terms volatility and risk is an error.[i] All investments carry risks—different securities merely emphasise different risk flavours. We think too many fixed-interest investors fixate on volatility and discount debt securities’ risks. Here we will discuss one such risk: Default risk—the risk the debtor doesn’t pay interest or principal due.

Risks Aren’t Only for Equities

Monday

3 Sep 2018
Fisher Investments UK

‘No-deal’ Brexit and equities: A Fisher Investments UK perspective

All summer, financial media and UK policymakers have been preoccupied with the possibility of a ‘no-deal’ Brexit, in which the UK leaves the EU next year without a new trade deal in place. International Trade Minister Liam Fox and Bank of England Governor Mark Carney recently warned that the likelihood of this is rising. Industry trade groups like the National Farmers’ Union claim potentially dire consequences such as food shortages loom. A series of government whitepapers providing ‘guidance on how to prepare for Brexit if there is no deal’, published on 23 August, revealed the potential impact in 25 different areas, from humanitarian aid programmes to banking and taxes. In our regular survey of financial media, we noted several pieces warning a no-deal Brexit could be catastrophic for the UK’s economy and equity markets.

‘No-deal’ Brexit and equities: A Fisher Investments UK perspective

Saturday

1 Sep 2018
Fisher Investments UK

The death cross isn’t stocks’ Grim Reaper, according to Fisher Investments UK

Here at Fisher Investments UK, we think that looking at the death cross has major flaws as a technical indicator and a poor history of predicting the future. A death cross occurs when a short-term downtrend (stocks’ 50-day moving average) falls below the longer 200-day moving average. According to the theory, when a death cross occurs stocks will lose momentum and struggle — or worse. Proponents point to global stocks’ death crosses in December 2000 and September 2007 — both near market peaks. Trouble is, there are more false reads than positive. According to the data we see here at Fisher Investments UK, global stocks flashed death crosses in 2004, 2006, 2011, 2015, 2016, 2017 and 2018 — all global bull market years.

The death cross isn’t stocks’ Grim Reaper, according to Fisher Investments UK

Friday

24 Aug 2018
Fisher Investments UK

Successful investing doesn’t require chasing the latest fad

In our review of financial media, headlines tend to highlight areas of the market that are either doing very well or very poorly. The extremes, hot or cold. Investors seeking opportunities may be tempted to look into shares of companies in the former camp. Often, the media coverage showcases the immense growth potential of these businesses. These firms will allegedly revolutionise their industry and change the world — implying people should invest in them now, get in on the ground floor and reap the benefits. A popular example today: companies whose primary business is artificial intelligence (AI). We think investing based solely on this type of criteria is limited. In our opinion, investors should refrain from pursuing the investment fad of the day.

Successful investing doesn’t require chasing the latest fad

Tuesday

26 Jun 2018
Fisher Investments UK

Why Oil’s Recovery May Not Be Rocket Fuel for the UK

People respond to incentives. And in market economies, few incentives top profits. In the energy industry, oil prices are a crucial determinant of drillers’ profits — and therefore, their behaviour. When a supply glut crushed Brent crude oil prices by -77 per cent from June 2014 to January 2016, drillers focused on areas where they could reduce costs, shuttering rigs they couldn’t run profitably.[i] Yet now, with prices snapping back 194 per cent from their low, incentives have changed.[ii] And, accordingly, oil drillers are deploying assets globally, putting rigs back to work and expanding activity. Seeing that, you may wonder if UK production is due for an upturn, boosting the British economy with it. But in our view, it is unlikely oil’s upturn will have a marked effect on UK production absent much higher prices, which we don’t expect.

Why Oil’s Recovery May Not Be Rocket Fuel for the UK

Thursday

7 Jun 2018
Fisher Investments UK

Why it is impossible to know whether Brexit really made every household £900 poorer

In his recent testimony to MPs, Bank of England Governor Mark Carney made headlines by claiming the Brexit vote had made British households £900 poorer than they would have been if Remain had won. Most of the media coverage dwelled on the political implications, including an apparent backlash from prominent pro-Brexit politicians. While we remain politically agnostic, we also believe it is important for investors to understand some of the flaws inherent in Carney’s estimate. A closer look at his methodology, in our view, shows why his statement need not darken your view of the UK’s economic fundamentals – or its equity markets – in the post-referendum environment. First, consider Carney’s actual words. While many headlines used phrasing like ‘£900 worse off,’ what he said was this: ‘Real household incomes are about £900 lower than we forecast in May of 2016, which is a lot of money.

Why it is impossible to know whether Brexit really made every household £900 poorer

Tuesday

22 May 2018
Fisher Investments UK

Brexit fears create a bullish backdrop for the UK

Nearly two years ago, the UK’s vote to leave the EU shook sentiment globally. In our coverage of UK media, we found many economists forecasting that Brexit would have major implications, including some claiming the vote would stoke uncertainty and harm Britain’s economy. We saw economists single out business investment, commercial property and finance jobs as being at high risk. But today, data measuring these allegedly at-risk areas suggests most of these worries may have been overblown. In our view, the persistent fears against a brighter reality suggest sentiment is too dour and underlying economic strength underappreciated, which creates an environment where equities often thrive. It seems fair to say that the UK’s economic resilience would have surprised those foreseeing doom and gloom after the vote.

Brexit fears create a bullish backdrop for the UK

Tuesday

3 Apr 2018
Fisher Investments UK

Nine years a bull

On 6 March, global equity markets marked the nine-year anniversary of the global financial crisis’s end and the beginning of the bull market that followed[i]. Because markets haven’t yet recaptured levels hit before a pullback began in mid-January, it is premature to say the bull market is more than nine years old — we won’t definitively know that without the benefit of more hindsight. We believe that uncertainty makes this an opportune time to discuss what typically does (and doesn’t) end bull markets — and why we believe the bull that began in March 2009 should have more life left. Since the MSCI World Index bottomed 6 March 2009, it has returned 274.7% per cent[ii] In our ongoing review of global financial media, we have seen some pundits argue that the recent dip is the first sign of a tired bull rally nearing its end.

Nine years a bull

Tuesday

6 Mar 2018
Fisher Investments UK

Brexit Isn’t Driving UK Business Stagnation

For more than a year and a half now, the UK economy has defied fears of the Brexit vote causing a recession. But the worries haven’t stopped — instead they have morphed. The latest iteration, seen throughout the financial media, warns that the UK is entering a Japanese-style ‘lost decade’ where firms hoard cash, invest little and rely on currency translation for profits. So far, however, we see little evidence that this is happening. Rather, we believe the latest fear is evidence that feelings towards the UK economy remain overly sceptical, increasing the likelihood that reality will continue beating expectations — a potential tailwind for UK shares. The new fear du jour, summed up in a recent Wall Street Journal article, goes like this: although UK corporate earnings have risen since the Brexit referendum, currency weakness is the key driver, benefitting multinationals the most.

Brexit Isn’t Driving UK Business Stagnation
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