Will 2020 Be The Best Year Ever For Irish Investors? We take a look at some of the headline facts of recent performance, to shed some light. We also share a few concise truths that Irish investors (as distinct from speculators) might benefit from being reminded of.

Investment Performance Facts:

For your benefit we very seldom comment on current market performance here. What value could possibly come your way from us regurgitating market commentary, not to mention sharing market predictions!?

We believe it more interesting, and far more valuable to share overall observations, and invite you to consider what it may or may not mean to you, as a long term wealth accumulator. The Best Year Ever For Irish Investors?

Investment Performance Fact #1: The great companies of the world (‘Equities’) have just had one of their best 3 months in history, Quarter 2 of 2020.

Investment Performance Fact #2: The great companies of the world (‘Equities’) have just had one of their worst 3 months in history. Quarter 1 of 2020.

Investment Performance Fact #3: Nobody knew that Fact #1 was going to happen

Investment Performance Fact #4: Nobody knew that Fact #2 was going to happen

Let that sink in.

Chances are, dear reader that you already twigged this. Nobody can or does, know what is or is not going to happen in the markets in the next 6 months. Even Nostradamus missed this one apparently (see Reuters Fact Check Team verdict on some social media claims!).

What spurred me to share this piece was a call from a potential client last week. She shared with me that their ‘financial advisor’ told them in January to take money off deposit and invest it into a Property Fund she was touting. The couple did so, and the following week the fund price was cut by 10%. The reason the advisor suggested doing so? Because ‘the fund is guaranteed to return 5% every year for the next 5 years’. That was not a prediction but a bare-faced lie designed to sell someone up the river. Property remains a decent long term investment, but nobody knows what it will do over the next 5 years.

Best Year Ever For Equities?

Speaking of predictions. There are still those who say the world is coming to an end. They have always been there, waiting in the wings – recent events have given them fire in their bellies, and ice in their eyes – they mean business! Maybe they are right – but there is not a shred of fact to support the claims. If you believe the claims, then you shouldn’t be investing, or saving. You should probably be off enjoying yourself and the short period of time that we have left on the planet as a race!

On the other end of the spectrum, there are those who say this is going to be the best year ever for equities. Some of the logic for such predictions were covered really well in this Irish Time article by Prionsais O’Mahony. Some are saying it will be a record year overall, and growth will continue upwards at the pace of the past couple of months.

Predictions Gone Awry! The Best Year Ever For Irish Investors

In doing some research for this piece, I came across this article from the Independent from January 2019. For context, by the end of 2018, a well diversified global equity portfolio was about 8% lower than it started the year.

This article shared some ‘wisdom’ from some of Ireland’s biggest investment firms, all of whom invest their clients’ pensions and investments based on their own ‘predictions’ of what will happen in the markets. Here are some of the quotes from the article at the start of 2019.

“In our view, the best years of the decade-long economic recovery and market rally are behind us” – Barclays Bank outlook

“We are moving into a period in 2019 when the economy will still be growing but at a slower, yet healthy, pace.” – Head of Global Investment Strategy, Davy

“We do not believe financial assets will rebound strongly in 2019” – Barclays

If you were basing your investment decisions based on these Irish expert’s predictions for 2019, you would have held-off, kept your funds in the bank. Meanwhile, by way of example, a simple and elegant equity portfolio that we often use for Irish investors returned 27% growth in 2019. Fact.

So What Do We Know? The Best Year Ever For Irish Investors

We do know that the stoic Irish investor has prospered by remaining fully invested in a sensibly diversified global portfolio, in over 95% of every rolling 10 year periods since market records began 100 years ago. Fact.

Investors whose portfolio was based on a plan which allowed for both the expected positive and negative performance of markets were not concerned with what the performance was to be over the next 6 months. Fact.

Realising there are far more accomplished and worthy minds than mine to draw from, we leave the final words to Burton Malkiel. He is a Princeton professor, author of ‘A Random Walk Down Wall Street’, and has been a maverick in the evolution of sensibly diversified passive investing for decades.

“There are three kinds of people who make market predictions. Those who don’t know, those who don’t know they don’t know, and those who know darn well they don’t know but get big bucks for pretending to know”

Thanks Burt!

The Best Year Ever For Irish Investors? We’ll see!

Paddy Delaney RPA QFA APA

Resources:

5 Ocassions to ignore your Financial Advisor

Can a couple retire with €1m pension pot??