Mr Mackay Senior wants to know WHAT TO DO!

By Mike Narouei, Content Producer at Boring Money

7 July, 2020

Holly's Dad seeks answers in response to this week's increasing market turbulence, Holly brings in the wisdom of crowds and portfolio management experts.

They’re back to school they’re back to school tra la la la laaaaaaaaaaaaaaaa, hahahahahahaha oh, cough, hello!

Last week we told you we would be crowdfunding in September. We’ve been thrilled by your response - over 1,000 of you so far have expressed interest. Thank you all. The (private) doors open for actual cash-wonga-readies next Tuesday (hint hint) and we’ll be notifying those of you who have expressed your interest with a secret squirrel link, before we go public later in the month.

Our crowdfund backers will also get special access to webinars and content which will give you the chance to hear from – and put your questions to - non-boring investment experts. You can pre-register here (https://emailboringmoney.co.uk/t/4QZH-E50C-DEQJU-B5VDC-1/c.aspx) or watch our video below to hear our story.

(Before we dive into today’s main story a short newsflash- most relevant to those in their 40s. Yesterday the Government confirmed that we will have to be 57 to get our hands on any private pension savings from 2028 and beyond. Today it is 55 years old. It’s all slowly creeping upwards folks.)

WHAT TO DO!?!?

My Dad told me off last week. My blog is “all very well” and “ha ha and hee hee” but “it doesn’t tell me what to DO!”

Well, I retorted, in a wounded-stung-child way. The thing is DAD that right now NO-ONE KNOWS WHAT TO DO! But, because I am now very mature, I decided that instead of sulking, I could ask some other folk for their opinion on where the world was going, what we might expect and how to position portfolios accordingly?

Should we:

  • Try to ride the US up even further…..before it falls in a (possible) heap?

  • Ditch tech – the Nasdaq is up over 70% since March lows....despite some wobbles yesterday…..Is there any juice left in this?

  • Gold? I get that people are nervous but has this haven for cautious investors spiked…..?

  • Under the mattress? Silly.

  • More Scottish Mortgage and other funds-of-the-moment with scary tech stocks in?

First up-those looking for income

The general headline is don’t be greedy and be patient.

Mark Dampier who retired from Hargreaves Lansdown last week after 30+ years in the markets tells me “Income is becoming harder to find. Don’t be seduced by a big starting yield which usually comes with huge risks. Be realistic, given interest rates and bonds are at historic lows. A sustainable income- i.e one that gradually grows - means accepting something around 3.5% from an equity investment. Global income funds from Troy, Fidelity, Evenlode and Guinness Flight are worth looking at.”

Adrian Lowcock from Willis Owen thinks people should not rush to give up on dividend paying companies just yet. “Equity Income has been forced into a reset and dividends going forward are likely to be more sustainable and realistic, offering the potential for dividend growth in years to come”. He also points to income stocks being well positioned for any local recovery. Interactive Investor’s Richard Hunter points out that Legal and General is still paying a dividend of about 8%.

Those just wanting to be solid

Richard also likes some defensive shares and points out opportunity in the bruised FTSE100. He highlights Reckitt Benckiser and Unilever. They make mostly boring, useful and necessary products which read like the product placement list for an Adrian Mole film. Domestos, Dove, Dettol, Durex and Clearasil. Toilets, sex and spots. No pandemic can get rid of the need for these things and they are enduring if not endearing. I bought some Unilever in the misery that was early April – unusually for me as I don’t normally bother with individual shares and stick with funds instead - and it’s up about 8%. This ‘boring’ share can sit in my pension and do its thing for the next 10 years. No rush.

Those seeking growth

Beware of all the noise out there. People are bored and news gets escalated fast. Fake Noos. Richard tells me about a share called Zoom Technologies in the US which went up by 250% based on its name alone earlier this year - before people realised it wasn’t in fact the Zoom of video conference fame. Oops.

Sidestepping some of the froth out there, he highlights some pharmaceutical companies as a favourite – he thinks AstraZeneca and GlaxoSmithKline are well-positioned and anticipates ongoing breakthroughs and developments in this sector.

Further afield and Adrian Lowcock reminds us about Asia and Emerging Markets. “Valuations are low and investors have yet to return to these areas of the markets. Asia in particular has fared better than the west as the region was better prepared (due to its experience with SARS) with many countries avoiding strict lockdowns and kept their economies open. These regions should also benefit from a weaker US dollar.” My JP Morgan Emerging Markets Trust which I’ve held forever has jumped by 15% over the last 3 months. 107% over 5 years. It’s like a yo-yo though - not for the faint hearted.

What do you reckon?

The problem remains this. No-one knows what is going to happen. And even if we did know what was going to happen, we wouldn’t know how markets would react. So the reason I don’t write too many blogs like this is because the best thing to do is to diversify, think long-term, not to get too greedy and not to try and read the tea leaves...At this stage, Dad is rolling his eyeballs, wondering when I got so boring, and is irritated because I STILL HAVEN’T TOLD HIM WHAT TO DO!!

Not that he’d listen anyway :0)

OK folks let’s check out the wisdom of the crowd. This blog post is up on our site and ready for comments. What do YOU think the outlook is/ is going to happen/ is a sensible investment strategy right now? For what it’s worth, Mr Mackay Senior doesn’t buy the Tesla /tech stories anymore and is largely in cash with a dollop of gold. Me? I’m still invested. No point in getting off this rollercoaster – I’m strapped in for years to come!

Holly

Please be aware that an investment like this is risky and should be part of a diversified portfolio. Please make sure that you read all available information before investing. – THIS IS THE RISK WARNING 😊