HERE we are at the end of another eventful year and yet, despite the twists and turns we have witnessed, little has been settled.
Does that mean, though, that 2020 will be the year when the eventful is accompanied by resolution and action?
In the UK it looks likely that Brexit may finally take shape after almost four years of political bickering.
In addition to this, it looks possible that the US and China could ink their long-elusive agreement over trade.
With unrest in Hong Kong continuing and a looming US election coming up in November, both sides have plenty of reason to come to terms.
It is therefore clear that it could really be a breakthrough year, although it is also clear that the going will not be smooth.
That said, when you are riding the rapids of the day to day, it never is.
Indeed, when you are surrounded by bubbling water and flashing paddles, it can be difficult to see where you are going.
But as an investor it is vital that you really try to keep a sense of perspective: always try to look at the broader picture, see where you have come from and you should be better able to spot where you are headed.
As investors, we tend to be focused on absolute GDP growth - the greater the overall market, the better it is for business.
And businesses have driven the gains seen in living standards over the past few decades. But people do not think like that.
Despite stratospheric improvements to the quality of life experienced by many, jealousy and a sense of injustice still burn just as fiercely in those who are left behind relative to the winners.
Indeed, unequal booms can be more divisive than widespread hardships. It is like the difference between the unity of the Blitz and the antagonisms of the 1980s.
Looked at in that way, the world’s political unrest and culture wars are the natural reaction to the burgeoning inequalities that have evolved over the past 10 years.
This is not anything new and it certainly is not the worst reaction we have ever seen.
It does demand solutions, however, which politicians and businesses are angling to provide.
This has implications for how our societies will evolve from here and that, therefore, has implications for investments.
However, the argument that our world is going to hell in a handbasket is a little over-absorbed in the present.
While economic data are noisy and imperfect and 24-hour news can be deafening, we believe that taking a step back and considering the broader picture is still possible.
It has become fashionable for investors to say they will “wait until the uncertainty has lifted” before making decisions.
But the reality is that the future will always be uncertain. Indeed, it always has been.
Yet in spite of all this, we cannot spend our days waiting to see how tomorrow will pan out. To do so would mean our investments would go nowhere.
That is why we took action to prepare ourselves well ahead of the UK election.
While the pound has made a comeback this year it is still significantly undervalued because foreign investors have spurned the stock market – and direct investment in other UK assets – for years.
We too had mostly abandoned domestic stocks over the past few years, focusing instead on larger-sized multinationals and overseas markets.
As the parliamentary deadlock started to loosen up in late 2019, though, we felt the risks had changed, so we changed our approach with it.
We have materially increased our domestically focused FTSE 250 investments as a result.
Now, if a clear path towards Brexit emerges, the pound could jump significantly higher, hurting our foreign holdings.
In those circumstances, we think the FTSE 100 may well be spared and – uncharacteristically – that would result in it going higher too.
Usually a strong pound is bad for the overwhelmingly foreign-currency-earning FTSE 100.
But because foreign investors have avoided the UK market like the plague, we believe they will return once clarity appears.
And they will use the large, liquid FTSE 100 to do it, pushing up its value. That is why we have increased our FTSE 100 investments over the past few months.
In light of this, we are heading into the new year with our paddles flashing, but our eyes on the horizon.
David Coombs is head of multi-asset investments at Rathbone Investment Management.
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