While it’s been questioned whether or not the saying “May you live in interesting times.” is actually an English translation of an ancient Chinese curse, it’s hard to question the suggestion that the times in which we are now living are very interesting indeed. Barely a day seems to go by without headlines commenting on how markets are reacting to the latest piece of bad news. Sometimes these are just storms in teacups, but there are arguably four key issues which could influence investment and investors for the foreseeable (or unforeseeable) future.
Say whatever you like about Donald Trump, nobody’s ever going to accuse him of being boring. From an investment perspective, it’s worth noting that what politicians want to do and what they can actually do in reality can be very different. For example, Trump pledged to repeal Obamacare but so far has been unable to fulfil this pledge due to political opposition (he has only managed to roll back a small part of it).
Similar comments apply to Kim Jong-un of North Korea. While he may, in theory, be absolute ruler of his country, the fact is that his country is a very small one surrounded by countries which are more powerful in every meaningful way and it is highly questionable how long he or his country could survive without at least some form of support from China and/or Russia. While neither of these countries is likely to take kindly to what they perceive as U.S./U.N. interference in their area of influence, it’s to be hoped that neither actually wants open warfare either, nuclear or otherwise.
The current unrest in Catalonia should surprise nobody who has any knowledge of European history or current affairs on the continent. Catalonia has its own identity including its own language and at this point in time it is arguably the powerhouse of Spain’s economy (although some would point to the fact that this was not always the case and highlight the fact that the 1992 Olympics received a lot of funding from the Spanish central government). In theory, it is impossible for Catalonia to secede from Spain. In practice, if calls for independence grow loud enough, it will be very hard for them to continue to be ignored by the EU.
At this point in time it’s anyone’s guess what form Brexit will take. Some people still believe there is a possibility, however slim, that it will never actually happen. Others believe that the UK is on course for a hard Brexit. Either could be right or we could end up with a “transitional deal” or similar which puts the UK somewhere in the middle. Given the lack of clarity around what is going to happen, attempting to make predictions about the eventual outcome of the Brexit at the present time is arguably an exercise in futility at best and potentially dangerous to investment at worst.
Riding the winds of change to positive returns
From an investment perspective, when it comes to dealing with the winds of change, it can be worthwhile remembering that there are certain elements which remain constant in people’s lives regardless of what happens in the world around them. For example, the need for basic necessities such as shelter, food and water will always be in demand regardless of the prevailing political winds. This means that investments which relate to them tend to be reliable performers over the long term. Of course, each investment still has to be analysed on its own terms for its quality and its suitability to your situation, but even in “interesting times” there is still the potential to earn good returns.