Monthly Newsletter – February 2025

1 February 2025

How have the forecasters performed in previous years

1st January – a day to celebrate a Happy New Year, unless you live here:

In this community of Cwn Gwaun, they continue to follow the traditional calendar proposed by Julius Caesar.

The Julian calendar doesn’t handle leap years properly, probably because Caesar had a Roman empire to build, and let’s face it, he couldn’t do everything! Every 130 years or so the Julian calendar gets another day ahead of our modern version.

This means it has drifted quite a bit over the course of the last two millennia. So much so, that the locals in Cwm Gwaun wouldn’t have had their big party (called Hen Galen) until January 13th. Good excuse to extend the festive season!

There’s a story that there were riots when the UK moved away from the Julian calendar in 1750 – that when September 2nd was followed by September 14th, people took to the streets demanding their eleven days back. Turns out to have been a satirical report, rather than the truth.
Actually, a couple of hundred people in Pembrokeshire breaking free of the psychological anchor of the calendar year IS quite impressive, because back in the financial world, at the start of the year everyone is doing the same old thing:
Making forecasts about the next twelve months… which aren’t really a good guide to anything.

This great chart from Bloomberg shows in pink the range of professional (!) forecasters –  UBS, Morgan Stanley, Wells Fargo, Barclays, etc – for where the US market will finish the year. And the black diamonds show where the market ended up.

No one’s nailing this!

Source: Bloomberg LLP. Past performance is not an indicator of future returns.

So why keep doing it?

In the Second World War, Kenneth Arrow (later a Nobel prize winner) was assigned to work in the weather forecasting department. His team became so frustrated with their inability to predict the weather that they asked to resign – they’d failed.Their resignation was rejected:

“The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes.”

Professional strategists and researchers need to provide numbers (otherwise what are they being paid for?!). But if you’re actually investing money, you tend to treat these forecasts in the same way you treat daily horoscopes.

Maybe entertaining, perhaps even correct occasionally… but not relevant for getting portfolios to where they need to be!
 
The Trump presidency – is it good or bad news?

The power centre of the US presidency has now moved back to Mar-a-Largo – Trump’s ‘Winter White House’. Looking at the temperatures, it does seem a sensible move with Washington DC hitting -10 degrees C and Palm Beach Florida a balmy 26 degrees C.
On the less sensible side of the President ledger is things like this (right):

So, are we ready for another four years of policy via Twitter X?

An example from his first year in charge is below – antagonising North Korea…

Source: x.com/realDonaldTrump

It’s easy to get concerned, and difficult not to be distracted.

But let’s add a little bit of calm, and a little bit of context, it’s worth revisiting one of our favourite charts; Big Market Days (BMDs).

This is how we explain the idea of volatility in a more … approachable … way. Rather than worry about standard deviations, we can look at how many times the market moved up or down by more than 1%, which is usually the threshold for people outside of finance to notice. It is updated every year to see how unusual stock markets were. For what it’s worth, 2024 was almost exactly average; 50 BMDs.

Interestingly though, if you look at 2017, Trump’s first year in office, the fire and fury on Twitter absolutely did NOT translate to markets. 2017 saw the least BMDs since 1965!

Source: FactSet/7IM. Past performance is not an indicator of future returns.

Now that doesn’t mean 2017 will happen again, but it’s worth remembering that no matter how loud the President talks, the finance world doesn’t necessarily have to listen!

UK marketing budgets see renewed rise during final quarter of 2014, but caution remains.

Source: S&P Global Market Intelligence

Key findings from the Q4 2024 survey:

  • UK marketing budgets return to growth after flatlining in Q3, but post-Budget bounce is shallow.
  •  Companies choose caution for now as they assess the impact of new government policies, but 2025/26 budget setting plans reveal strong optimism.
  •   Sharp growth in event budgets shows companies’ continued desire to generate leads in face-to-face settings.
  • Direct marketing continues its impressive growth streak, although firms shy away from main media advertising.

 Container? No- brainer!

When it comes to building portfolios, diversification is the way to go. But when it comes to building global supply chains, you want everything to be the same.
This is Malcolm Mclean who figured that out.

Malcolm ran a successful trucking company in the 1930’s based in North Carolina. As it expanded, it caused a problem: his trucks were spending forever in waiting around in ports. Empty, parked trucks don’t make money.

The problem was that shifting cargo around hadn’t changed for hundreds of years.


Source: Wikimedia Commons

Want to send something up the coast? Take a truck of cargo to the port, unload it all on to the quay, reload it bit-by-bit onto the ship, repeat in reverse at the other end. Chaotic, clunky and insecure – the picture below is from the Korean War, but could just as easily be from the 1800’s.

.

Mclean’s insight was that the only thing that matters is getting cargo from one place to another as quickly as possible. It appeared everyone involved in the supply chain was doing different things. Ships were being built for sailing efficiency, trucks for driving quality, and ports for storage capacity.

What about a container that didn’t have to be unloaded? It could be plonked onto a truck in North Carolina, and then a boat in New York, and then a different truck in Rotterdam. This was not an entirely new suggestion, but no-one had taken it seriously.

Mclean did. He thought about the whole thing, end-to-end. And in 1956, he made his move.

  • He designed and built a container that stacked and locked (with his engineer partner Keith Tantlinger).
  • He bought two ships and refitted them to store his new containers efficiently.
  • He persuaded ports to redesign their layouts, and to invest in cranes (notably in New York and California).

He then did one more thing: He made his container design available for free, giving up the rights to royalties to encourage it’s adoption as the global standard.

By 1974 uploading looked completely different:

Today, 90% of international cargo travels in the standardized containers created by Mclean, the cost of shipping a tonne of freight has fallen by about 90% since 1930. The largest port in the world, Shanghai, unloads nearly 50 million containers every year!

Sometimes, the best ideas come from thinking ABOUT the box … rather than outside it! Food for thought…….             

Team News

In a positive news story, one of our Financial Planners, Rob MacMahon, has been awarded Chartered Financial Planner status by the Chartered Institute of Savings and Investments (CISI).  This membership level is awarded through a combination of qualifications, experience and ethical standards in the field of financial planning in the UK.  We all know how hard Rob has worked to achieve this status and the positive impact it has had on our business and to his clients.    

                                                              Congratulations Rob!

Clear Minds are pleased to announce we are sponsoring Scottish champion pool player Donna Smith.
She has an exciting year ahead playing for Scotland and hoping to qualify for the World Championships in Ireland this year.
Donna’s story will be added to the Clear Minds website over the coming weeks, and we hope you will find this interesting and perhaps watch her progress throughout the year. We will however, be keeping you updated.

https://clear-minds.co.uk/

https://www.justgiving.com/clearminds

We are also happy to advise that Charlotte McIntyre and Gary Beach are once again running the Brighton Marathon on Sunday 6th April to support the charity.

They are hoping to beat their respectable time of 5 hours last year, which was despite Charlotte picking up an injury on the way!
Please consider donating through the following links or QR code to encourage them in their challenge.
We would be grateful if would consider sharing the link with family and friends who you feel will contribute to this worthwhile cause.

There are still two places available to run in this event for the charity! If you are tempted to test your running fitness email [email protected].

https://www.justgiving.com/campaign/clear-mindsbrightonmarathon2025
or
https://www.justgiving.com/page/gary-beach-3?utm_medium=FR&utm_source=EM

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