The Financial Times is making those dependent on financial markets (DC ones) a little nervous.
Most people who are in DC pensions would not use the word “investing” to describe what they are doing. If I ask people what they are doing , most people say they are contributing through pay or waiting to take their money back. But that is not what the market thinks they are doing. The market thinks it is investing and rewards them when markets are going up and takes money away when markets are going down. Here are some excerpts from the FT article.
Rollercoaster market moves in the final days of 2024 offered a blunt reminder that investors are heading into a year of living dangerously.
My fund is invested in markets (mainly equity with a bias towards good ESG practice). I had no idea I was rolling with the markets and am really rather happy to have a lot more now than what I had at the start of the year.
Stocks and bonds lurched lower after the Federal Reserve’s final policy meeting of the year, spooked by the notion that the central bank may be unable to keep cutting rates (as it had previously expected to) because of still-simmering inflation.
I can’t make head or tails of this but as stocks and bonds represent what I can buy – and I generally find my funds invested in America, I am guessing cuts in the amount in my pot is on its way.
This is all to do with prejudice against Donald Trump
The key is not what Fed chair Jay Powell said. It is what he was careful not to say but what every fund manager knows: when Donald Trump returns to the White House this month, his economic agenda could be bad for growth, fuel inflation, or even both.
I can’t say I’m very impressed about this reporting. Later in the article we get an example of what fund managers are up to
This leaves investors blindfolded and tiptoeing around rakes. “‘Meh’ is the most unlikely 2025 pathway, in my view,” wrote Henry Neville, a portfolio manager at the Man hedge fund group in a recent blog. “I can see a 1970s scenario of dormant, not dead, inflationary pressures reawakening. Both the equity and bond markets freak like it’s 2022. But equally, it’s conceivable we get more market-good Trump (deregulation, tax cuts, government efficiencies, Ukraine peace deal) than market-bad (policy volatility, tariffs, labour market restrictions) and then we could party like it’s 1996.” Neville leans towards pessimism but fireworks lie ahead in either case.
This makes Neville is a hedge funder who leans towards bad news but predicts “fireworks” that could take us anywhere.
A view reinforced by Aviva’s Peter Fitzgerald
“We need to be humble and say, ‘I don’t know where this is going to break’,” said Peter Fitzgerald, chief investment officer for macro and multi-asset at Aviva Investors in London. “The key is, don’t get overconfident.” Good luck.
I am sorry but this is really not journalism nor is it punditry. It is not helpful to tell people like me who know nothing to not get overconfident. I am not confident, I am sitting on 40 years of savings and made such choices about spare cash which I want some help with.
Instead I could see my fund go down 20% in 2025 as it went up by 20% in 2024. I got more money from the upside in the markets last year, than from pay at work and I would do better shoving my money into cash than work – assuming what these chaps are suggesting. Am I being overconfident? I think I am investing long-term and should do what I did last year and look at the value of my fund at intervals.
Should I allow the market to take back all my contributions? Should I be invested? Should I be reading this stuff in the FT? The answer is to smile politely and get on with life. At 63, I hope to live 20 years and have no interest in 2025 as the determinator of my lifestyle for the rest of my life.
2025 will not be the year of investing dangerously.
