I can still remember the moment in 2008 as I was driving to a client meeting. 2008 was one of those years when all hell was breaking loose on the stock market and the values of pension funds with a high percentage invested in equities were suffering falls of 30% or more.

A song came on the radio sung by a guy with the wonderful name of Seasick Steve and I just started laughing out loud because Seasick Steve had just given me the perfect antidote for a client who I knew was going to be unhappy with his pension savings values. Steve was an American Blues singer who also probably had some of his savings invested in the stock market!

Sure enough my client, looked at his values and then at me, quizzically, as if to say the falling values of his fund were totally my fault.

Before he could start giving out me, I said to him with a smile on my face “well Michael you started out with nothing in your pension fund and still you have most of it left”!

In fairness to Michael who always had a great sense of humour he just laughed and we moved on with our discussion!

I remember around the same time having a similar meeting with another client who had sold his business in Ireland’s boom time. The values of his investments a few years later, were well below what he had originally invested with me. I asked him a question “if you hadn’t sold your business when you did, and were trying to sell it today, what percentage of what you actually sold it for, would you get. He said “I probably couldn’t sell it at all right now”.

Sometimes it is important to put things into perspective for people to try to stop our customers and in many cases our friends from making short-term rash decisions. Sometimes we have to help them through the difficult investment times so that they do not panic and sell out at the bottom of the market.

Good investing needs a longer term timeframe and a good bit of discipline.

Right now as we move gingerly into 2016 we again have plenty of stock market jitters. Warren Buffett when asked for his prediction as to what the stock market would do at similar times, used to answer, “It will fluctuate”. He didn’t know whether the stock market would rise or fall over the next 12 months and neither does anyone else.

Interesting to see what the stock markets have done since the bottom of the last correction in March 2009. From then to now, the MSCI Europe has grown by 90% and the MSCI USA has grown by over 200%.

Certainly if there was great value in 2009 the equity markets are not cheap now, and it is probably a time to understand that during the next few years we will probably experience sluggish and quite volatile world stock markets. Maybe it’s a time to consider again, what was probably the first bit of investment advice any of us ever heard.

“Don’t put all your eggs in the one basket”. The advice was that it was better to spread our investments around. Perhaps to have some in equities, some in property and some in cash (or good absolute return funds!). Probably not the worst advice as we start into 2016.

Ted Dwyer Family Business

January 2016