• Stephen Walters

Between Scylla and Charybdis

The Dexterity portfolio has suffered a sharp fall this month: all holdings down, with clean energy, infrastructure, cyber security, electric vehicles, healthcare and mega-trend technology tumbling furthest.

I hadn’t anticipated that, because those tech-based trends seem to me so obviously robust for the future. Meanwhile, the traditional types of stock are also down, but not nearly so far.

Those of you who hold Scottish Mortgage - in this century probably the most famous example of astute fund management - will notice it too has fallen heavily; so this is a big boat in which we’re all embarked.

Looking back, I can see the first wobble began in early Nov, with fears that US inflation would not be as temporary as the Federal Reserve had been suggesting.

Then, all around the world, inflation began to rise faster than central banks had anticipated; and omicron emerged. Now inflation is at 7% in USA, and 5% here.

The mandate for central banks is to manage employment and inflation; not to protect stock markets. I regret to say I think we should brace for worse before better because - with interest rates presently negligible - there’s not much central banks can do except raise them. That’ll be very painful for billions of people and for not a few governments.

Meanwhile, although in UK and NewYork the spike of omicron is past, the virus has a long way still to spread, which renders this no ideal time to raise rates…

Yesterday someone tenderly offered that this is an adventure, and we’d best hang on. As I write this I’m smiling with gratitude for her empathy and your stamina.