I am afraid that many people who have happily watching their DC pension pots rise and rise in value over the past four and a half years are dreading clicking through to see the value of their plan today.
The FT is running an excellent article this morning
” Trump’s chaotic trade policy has caused many to question their pension strategy — FT Money went looking for answers”
And as share prices tumbled at the beginning of this week, Denis Oakley, a 50-year-old entrepreneur from Loughborough, sold everything in his self-invested personal pension, apart from gilts. There is always someone who is ahead of the game and I hope that Denis isn’t worried too much about the valuations of his gilts.
The FT relies on having a large number of people who play the market and enjoy self invested personal pensions even when times are tough but they represent a small minority of the people in the UK (even if they are a speciality of the FT).
In my experience the vast majority of people are in retirement funds which are struggling right now to understand their own value and this is because companies do not know their own viability. This is more the case in other countries than in British companies but when in doubt, market down and for most of us, our DC pots are emptied for no apparent reason.
The difference this time is not something we can see (the Covid pandemic) it is a change in the way that we value the same companies we were invested in or lent to at the beginning of the year. Actually, most people had been warned that Trump was careless of preserving valuations and more keen to see through his vision of restoring America to the country he valued (as he imagined it in the 50’s and 60’s).
But nothing fundamental has changed, we could still hold on to the vision we had of the future we had prior to Trump taking charge and I don’t see a fundamental reason for seeing the world too much different.
The FT ask us
“should I keep investing in the stock market?”
“should I rebalance my portfolio?”
“does 60/40 still work?”
“should I buy an annuity?”
I wonder if these questions mean much to most people. The reality is that people do not feel up to answering these questions, they want collective decisions taken on their behalf and underwritten by some kind of mutual organisation , whether it comes from the Government, product provider or trustees, they want someone else to take the decision for them.
I don’t want to run down the FT, I am an avid reader, but I think we should stop arguing that we can plan for retirement when markets are in turmoil. We simply cannot. Almost anything we do right now is laced with poisonous danger.
My advice to people who have time on their hands this weekend is to watch the golf or the rowing or the football and forget about the madness of the markets.
Feel comforted that there is no happiness in the USA where 401ks are down as much as SIPPs and the valuations of your master trusts. The world is having to endure the consequences of Donald Trump.
