Shenanigans in financial markets last week, particularly Japan, seemed to come from nowhere – they didn’t. It again highlighted the struggle to make money in recent years, trying to sensibly balance risk and reward. Let’s explore all of that and the continuing opportunities for longer term investors.
In late October financial markets came back from the brink of very sharp falls. Optimism took hold as investors imagined that interest rates might fall much sooner than expected in 2024. Is that optimism justified? Let’s see…
There is no one fact which usefully informs us right now. Rather we have a jig-saw, and the pieces have been gradually emerging over the last couple of years. The picture is becoming clearer, and the latest shape was inflation volatility, which sounds dry but is very informative for investors. What works for investors in this environment, and should do so for years ahead, is reasonably clear from historical precedents in financial markets. But we still need to navigate some rocks in the shorter term.
From November, US financial markets and beyond began dancing to the tune of the US Federal Reserve, who hinted that collapsing inflation would allow interest rates to be cut sharply and soon. With the bleary dawn of 2024 the rhythm became more a stagger and a wobble, with bursts of exuberance, almost exclusively in technology. Let’s look at the detail.
The Tax Year End Is Looming
With the tax year coming to a close on the 5th April, now is an opportune moment for us to remind you about your key allowances while there is still time to act, if you haven’t done so already. These include valuable inheritance tax gift allowances.
In late October financial markets came back from the brink of very sharp falls. Optimism took hold as investors imagined that interest rates might fall much sooner than expected in 2024. Is that optimism justified? Let’s see…
In recent weeks you might have spotted scary headlines proclaiming that just ahead lies a repeat of the Great Crash on 19th October 1987. Other than it is October again, the parallels are very small indeed. If only that were good news, but it isn’t. Where we are today is both more complex and more dangerous, unless you are prepared.
This runs a bit longer than usual, but a lot has been happening.
We will start with hidden opportunities, those typically out of sight of UK-based investors, seduced by our media gloom. Then we will move on to the less positive bits.
Getting to grips with Capital Gains Tax (CGT) is particularly important right now, as the rules are changing quite dramatically from April.
For example, you could be somewhat better off paying some capital gains tax now, rather than paying even more in the next tax year, after 5th April 2023.
In December 2022 we said: “If you took a strong view on markets in 2022, whether up or down, it was a ‘A Year Of Pain’, as the FT put it”
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