What would you ask for as an investor?
It is during the long, cold winter evenings where we might settle down on the sofa with our friends and relatives, warmed by an open fire, and enjoy a good story. Sleeping Beauty is a traditional fairy tale and has an enduring appeal. You might hunker down indoors in front of Disney’s evergreen cartoon, venture out to the local pantomime version, or marvel at Tchaikovsky’s beautiful ballet. Whatever you chose to do, the story of Sleeping Beauty seems to go with this time of year.
In the Disney version, the king and queen have a newborn daughter and invite the three good fairies, Flora, Fauna and Merryweather, to her christening. Flora and Fauna each give the princess gifts, at which point the bad fairy Maleficent arrives, furious at her omission from the guest list. She curses the princess to die before her 16th birthday by pricking her finger on a spinning wheel. Merryweather cannot remove the curse, but she could alter it so that Sleeping Beauty falls into a deep sleep until awoken by true love’s kiss.
As we end 2024 and approach 2025, what three wishes could we realistically ask Flora, Fauna and Merryweather for the New Year?
In the 1959 Disney movie Flora gives Sleeping Beaty the gift of beauty. In 2025 we cannot expect beauty from our investments but perhaps we can hope for something giving us the patience and wisdom to stick with our investment portfolio. We will almost certainly have setbacks in 2025 which is when we will need a sprinkling of patience and a dusting of wisdom from Flora’s wand.
Fauna gave Sleeping Beauty the gift of song, which is not much use outside the Enchanted Castle, although you can always ask your contact at Callanish Capital for a tune. 2024 was a mixed year for your investments with government bonds broadly flat, the UK equities up about 6% while the US was up a whopping 27%. We may not be able to sing the same tune in 2025, but maybe we can ask Fauna to help us to hum something similar.
Figure 1: S&P 500 vs FTSE 100
Maleficent has cursed us with investment uncertainty. As we know, there is conflict in Ukraine and the Middle East, but in 2025 there is uncertainty in previously stable investment destinations. The US has a radical new administration that promises to shake things up domestically and internationally. France has an unstable government and a parlous financial position. Germany’s government looks to be on verge of falling as does the president in South Korea.
Nevertheless, perhaps the final good fairy Merryweather can step in here as she does in the Disney movie. She cannot remove the curse of uncertainty, but she can modify it so that it turns into a back-handed gift. It is by tolerating uncertainty that investors get higher returns than cash – if everything in the future was clear cut and blue sky, nobody would earn returns higher than cash from their investments. Merriweather’s gift is to turn uncertainty into higher returns.
You may remember there was a prince in the Disney story of Sleeping Beauty. He was armed by the good fairies with Sword of Truth and the Shield of Virtue to fight Maleficent and kill the fire-breathing dragon. Now, Swords of Truth and Shields of Virtue are hardly 10 a penny, and you might have had to manage expectations if one appeared on a grandchild’s Christmas list. Yet do we need to be bestowed with magic powers to navigate what is sure to be a challenging year ahead?
A crystal ball would be nice, but failing that we usually have to make do with what we have. Perhaps the Crow and the Pitcher would be a more fitting story – a thirsty Crow saves his life by repeatedly dropping pebbles into a pitcher of water, thus raising the water level high enough to allow him to reach his beak in and drink; a repeatable process that leads to a the realisation of a longer-term goal. Not very Christmassy, but it has a lot in common with long-term investing; we hope 2025 will be one more pebble in the pitcher.
This is our last Capital Compass of 2024. We hope you that all your wishes come true, or failing that, you have the patience of a crow. Have a very Merry Christmas and a Happy New Year.
Please be aware that the value of investments may go up or down and you may receive back less than you invested originally. Past performance is not a guide to the future.
This document contains general information only and does not provide any advice or guidance specific to your personal circumstances.
Callanish Capital is authorised and regulated by the Financial Conduct Authority to manage investments but does not provide Financial Planning or Investment Advice. Please refer any such queries to your Financial Advisor.
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Callanish Capital Ltd is a Discretionary Fund Manager, directly authorised and regulated by the Financial Conduct Authority (“FCA”) under registration number 955992.