We worry about money when we don’t have enough, but we also worry (possibly more) if we are fortunate enough to have plenty!
It is easy to become disenchanted with say, the lack of substance and leadership qualities in our political leaders, or the mediocrity of economic activity post-2008, or the apparent short-termism of finance in general. Yet, we are arguably living in the greatest era of opportunity and growth there has ever been and perhaps optimism, rather than pessimism, should be a key factor in what informs our views and opinions.
The increasing roll of technology
Technology almost daily moves us into unknown territories which frequently enhance our lives, but to properly appreciate this we need to stand apart from a diet of every day negativity and embrace the improvements we are witnessing in areas such as medicine, agriculture and transport. Change has always been (and will continue to be) a constant in society, but technological advances are now accelerating the pace of global change, to a degree by which it now touches numerous aspects of peoples’ lives.
When one thinks of someone like the Tesla car company, thoughts focus on electric cars, although, in reality, Tesla is actually likely to have a far greater impact on the infrastructure of our road systems than the manner in which our vehicles are powered. Their solar energy division is already transforming remote areas of the World by introducing electricity, without the use of traditional power lines. So what does this all mean for your investment portfolio?
Most investors choose a cautious approach, trying to avoid the possibility of unpleasant surprises and the fund management industry itself generally adopts the exact same approach, preferring to be measured against their peers, or a myriad of ‘safe’ metrics! There seems to be a level of complacency on display by staying in more or less the same place as others and fund managers have long since become adept at developing strategies to mirror the majority, rather than to truly innovate.
Apple, Google and Amazon were once seen (and not so long ago) as risky investments, but imagine what our collective disadvantage would be, if a small minority of investors had not been prepared to share in the vision of their founders and provide essential backing, to help bring such exciting new ventures to market.
How this affects your portfolio
So, what are the implications of the above for your portfolios? Well, one potential pitfall we need to try and avoid is that of remaining complacent about change and to remind ourselves, every now and again, that risk can indeed bring reward. Whilst ‘risk’ might appear to increase the possibility of failure and loss, that possibility is arguably no greater than the potential for failure should we simply choose to stick to the established path.
We hope this article has given you a little food for thought. Please feel free to contact us if you would like to discuss our investment strategies in greater depth, in particular how we go about achieving a balanced asset allocation within your own portfolio.