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  • Writer's pictureStephen Walters

Risks pernicious or acute

Members of the most closely-watched financial authority in the world - the US Federal Reserve - yesterday named five risks they see in the offing:

  • The zero-tolerance policy of COVID-19 in China continue to disconnect supply lines around the world,

  • Geopolitical turmoil between Russia and NATO countries push energy prices still higher, and bring about shortages too,

  • The pandemic somehow worsens,

  • Wages grow faster than productivity, triggering a spiral of wage–price inflation,

  • Inflation breaks its moorings, and drifts away from longer-term expectations.

As uncertain as these conditions are, markets - in my opinion - did over-react in December-January. Perhaps that’s what the Federal Reserve hoped would happen; maybe saving it from raising interest rates to a level beyond the capacity of millions (billions?) of vulnerably indebted people to cope.

My priority being always to look for investments capable of withstanding risks either pernicious or acute; I regret I’ve no new themes yet to offer. What I do see are more ETF providers introducing funds on themes we already know - water, clean energy, cyber security etc - because they have proved popular. To have been in the vanguard of that trend gives me a sense of surprise and joy.

In case it might be of value to someone you know; I’d like to share a change of policy here at Dexterity. Prompted by seven factors -

  • Investment timing is a matter of luck as well as judgment,

  • We anticipate markets will persist volatile for at least another year,

  • We acknowledge the value of our work shows up only gradually,

  • Even though our fees are probably lower than most IFAs, our services come at a cost,

  • Clients have to take us on trust at the very moment when they feel most vulnerable,

  • We’re financially in a sound situation,

  • We’d like our clients to know we are with them through rough times as well as smooth,

- Philip and I have agreed from today - for clients investing via Dexterity for the very first time - we’ll defer sending our initial invoice until the investments we've recommended reach a profit equal to our bill. If that doesn’t happen within a year, we'll waive payment.

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