We didn’t know it at the time, but when we launched MoneyWeek 15 years ago, we did so into the beginning of an extraordinary period for economies and markets – one that will still be being used as a case study of policy madness in financial history courses 300 years from now; one in which governments handed over almost full responsibility for their economies to central banks – who then messed it up.
Turn to our markets section (or read Bill’s thoughts) and you can see the results. Years of super-low interest rates and quantitative easing, imposed by central banks terrified of low growth in the West’s debt-ridden economies, have left us in a horribly unstable situation. Cheap money has blown bubbles all over the place. And those bubbles are beginning to pop.
Commodities are down and out already, with the oil price at 2004 levels. And the Chinese stockmarket has had its crash. But other nasties are brewing. Keep a close eye on junk bonds and London houses. They may be next. I suspect that when 2015 is being taught to incredulous students in 2115, it will be seen as a turning point in the central bank cycle – the last year in which we all clung to every word every central banker said, believing that they really could control markets.
By the end of 2016, as the US and the UK both try to normalise rates (and those in their 20s experience their first ever rate rise as adults!), we’ll know they can’t and will, I hope, return to looking at the fundamentals when we consider investing.
The next issue (out on 8 January) will be all about these fundamentals. It will be packed with forecasts on, recommendations for, and warnings about 2016 from MoneyWeek’s core team of investment experts. Should you stay in Japan? Is Europe really recovering? Is China about to enter a fabulous long-term bull market? Can you trust dividends in the UK? If not, then where can you find enough of a yield to survive retirement? The long answers to all these questions will be in the first issue in January (the short ones being yes; maybe; yes; no; and tough one).
Meanwhile, remember that in tricky times there is much to be said for simple investing. At MoneyWeek we like investment trusts. So a few years ago we chose six of the ones we like best, and suggested them as an equal-weighted portfolio for anyone who just wants to invest and relax. It’s gone well.
The total return on the FTSE All-Share year-to-date is -2%. Global developed markets (as measured by MSCI) have returned 2.5% and world markets as a whole (again MSCI) have delivered just 1.3%. Our portfolio has seen a total return of 8.5%. We are pleased. Finally, I’d point you to our Christmas Quiz. It’s been quite a year for economies, markets and, for that matter, politics. See how much you remember. A very happy Christmas and New Year to all our readers.