Holidays have much in common with financial audits!

I was looking at my diary yesterday and I could not believe how much time I have spent on holiday this year! I thought you might like to see a picture of Mary and I waiting to go in for dinner at the recent Paradigm Partners conference in Marbella! However, I have come to the conclusion that this has been a good year to get away from all the market ‘noise’ which can so easily make us fearful when we should be bold.

Technically, ‘market noise’ is the seemingly mindless back and forth movement of stocks and shares over small time frames but commentators often now include in the description the information overload that tends to stop fund managers and individual investors from seeing the big picture.

My 2011 holiday diary

January: Eastbourne (4 days) and London (2 days); February: Nothing (tough going!); March: Cornwall (8 days thanks to a good client); April: Durdle Dor (5 days with family); May: At sea (4 day PIMS conference cruising to Guernsey); June: Sidmouth (6 days holiday for coach party of friends arranged by us); July: Central Asia (14 days with daughter and son-in-law who are working out there); August: Nothing (as we had a joint birthday party to organise for 85 relations and friends); September: Marbella (2 day conference plus 4 days holiday); October: Norway (12 day cruise leaving shortly!). Thankfully we have a daughter, her husband and a grandchild staying with us for three months from the beginning of November so we will be at home for a while.

Arch Audit

One of my priorities over the last few weeks has been to prepare for last week’s bi-annual compliance audit of our company. In the event it went smoothly. Audits of this kind tend to disrupt normal business but they are vital for the good health of any financial services company. This is because audits inevitably show some areas where improvements need to be made but more than that they allow me to take a view from on high as it were of the way the company is working.

Holidays have the same effect

I find that holidays produce much the same benefits. They are different to audits for me in that my wife does all the hard work of planning and preparation. However, as a result of having time to see a bigger world far away from my office, to meet new people, have new experiences, to relax, read and think I usually return to the office with at least one or two ideas to improve aspects of the business or my management of it.

This year has been one of the most successful for our business that we have had. I am sure the fact that I have had more holidays than usual has something to do with it! Of course, it is essential to have a really good team running the office while I am away and we now undisputedly have the strongest team of advisers and support staff that we have ever had in our 21 year history, not forgetting my co-director, Sarah Bond, who kindly arranges her holidays around mine!

Get away from the market ‘noise’

I am not unaware that there is a crisis of confidence in the financial markets but I have been around long enough now to know that that will pass. Life and financial markets are very cyclical and the key to successful investment (as opposed to day trading) is not timing (a lesson that is hard to learn) but patience (even harder to learn). Investors should ideally think of themselves as farmers, sowing, reaping and harvesting a crop. Just as a farmer is prepared to ‘invest’ his seed and wait for the elements and the seasons to bring his investment to a plentiful harvest, so successful investors learn to tune out the ‘noise’ with which the media bombards us every day and concentrate on the big picture.

What is the big picture?

We are all different but for me the big picture is created by asking myself a series of questions. Will there be less people wanting to move into the cities and experience the ‘good life’ in China, India, Brazil, Africa, Kazakhstan etc in 10 years’ time? Will human beings need more manufactured goods and commodities in 10 years’ time or less? Which companies are best placed to provide these efficiently? Are those companies all situated in the UK, and if not, where are they situated? What will eight holidays a year cost in 10 years’ time and where will the money come from once I have retired? Have I factored the financial needs of my grandchildren into my retirement planning? Will I achieve the growth I need on my capital by leaving it on deposit? How will inflation of over 4% pa affect my investments? If risk and reward have been shown to be directly related, should I be taking more risk with my investments to achieve a greater reward? Can I afford to waste part of my investment returns in unnecessary tax?

Most of us don’t have the time, expertise or the inclination to answer all of these questions and more. But you don’t need to. We can work with you because we are partnering with an internationally recognised investment research company and professional investment managers. Together we can help you avoid the ‘noise’ and keep you on track towards your financial goals.

Just one other thing

Apart from being on holiday one of the most important things I have been doing this summer is investing. It is unlikely that we will see such a good opportunity to invest as this within a generation. As Warren Buffet, who knows a thing or two about investing, has famously said “Be fearful when others are greedy and be greedy when others are fearful.” It is the latter part of that statement which we need to heed right now. As I have not seen such fear in investors for a long time I reckon that this must be as good a time as any to follow Mr Buffet’s advice.

If you would like to discuss your own investment planning please ask your usual Arch adviser (they are not all on holiday!) or telephone 01483 204600 or email enquiries@arch-fp.co.uk.

This entry was posted on 27/09/2011 at 03:54 pm and is filed under Blogroll. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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