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‘Play it again ‘Uncle’ Sam’

By Peter Brooke
This article is published on: 4th February 2025

04.02.25

Looking forward to 2025

Another year and another wonderful Spectrum conference. More on that in a moment.

Last year, in Budapest, was my 20th conference with Spectrum after which I offered a fairly cautious outlook for the year to come. You can review my thoughts in The view from the Danube

I have now just returned from a superb four days in Casablanca, hence the name of this piece, which was our first ever conference outside of Europe. We had another great group of experts who shared their views on the key themes likely to shape 2025. From the future of US markets under Trump 2.0 to opportunities in bonds and the transformative power of AI; here’s a summary of the insights most relevant to your investments and financial goals. Overall I feel cautiously optimistic looking forward to 2025.

Market Highlights & Opportunities

Market Highlights & Opportunities

US Exceptionalism: Can the Outperformance Continue?

Even with the slightly pessimistic outlook for 2024, the US stock market had an exceptional year, with the S&P500 delivering one of its strongest performances in history, though much of this was led by a small handful of stocks.

As we look to 2025, several factors suggest US markets could remain a standout:

  1. Momentum: The US economy grew by 3.2% in 2023 and is forecasted to grow 2.8% in 2024, showing resilience despite high inflation and interest rates.

  2. Earnings Growth: US companies are projected to achieve earnings growth of 13.8% in 2025—significantly higher than the 7.4% forecast for European companies.

  3. Profitability: The US has long maintained a profitability edge over other developed economies, and Trump’s deregulation efforts could further enhance competitiveness.

  4. Structural Advantages: Energy independence, favourable demographics, and leadership in technology (particularly AI) continue to position the US ahead of its global peers.

Trump 2.0: Pro-Growth Policies and Market Implications

Trump 2.0

With the Republican Party securing a clean sweep in the 2024 elections, President Trump is expected to have more freedom to implement his policies in his second term. Here’s what investors should consider:

  • Focus on Stock Market Performance: Trump views stock market performance as a key indicator of his success, aligning his administration’s priorities with investor interests.
  • Trade and Tariffs: ‘America first’ tariff policies aimed at encouraging manufacturing in the US could have a mixed impact—potentially limiting inflationary pressures but altering global supply chains.
  • Tax Cuts and Deregulation: Further tax cuts and red tape reductions are likely. While tax policy changes may take time to impact the economy, they could provide immediate support to stock markets.
  • Immigration: A crackdown on illegal immigration could weigh on certain sectors like agriculture, but a scaled-back approach may reduce the economic disruption.
  • Geopolitical Stability: Trump’s administration is expected to focus on negotiations over conflict, which may support global market stability.While there are risks—such as high valuations in sectors like Artificial Intelligence (AI), the US markets remain supported by strong fundamentals, making increased exposure to this market a prudent strategy.

UK Bonds: A New Era of Opportunity

UK Bonds: A New Era of Opportunity

Bonds are regaining their appeal:

  • Attractive Yields: UK gilts are offering a 5.5% yield, equivalent to a real return of nearly 3%, presenting an appealing alternative to equities, especially in Europe.

  • Diverse Opportunities: Investors are also finding value in international bonds, including those from Portugal, Romania, and Germany.

  • Volatility Awareness: Bonds have become as volatile as equities, underscoring the need for a well-diversified portfolio.

AI: The Next Growth Engine

AI: The Next Growth Engine

The AI revolution is driving innovation and creating new opportunities across industries. It is important to consider those companies who will be enabled by AI and who will earn from “enabling the enabled” as well as those companies supporting the infrastructure of AI.

Key investment areas include:

  • Data Ownership and Infrastructure: Companies like RELX (legal and medical data) and Equinix (data centres) are poised to benefit from the AI boom.

  • Efficiency Gains: Firms such as Rentokil and Waste Management are leveraging AI to optimise operations and drive growth.

  • Cloud Infrastructure: AI can’t happen without the Cloud.

Navigating Risk in 2025

Navigating Risk in 2025

Understanding and managing risk is critical to achieving long-term financial success. I will be writing a newsletter in the coming months focussing solely on ‘risk,’ but for now here are key considerations:

  1. Inflation remains sticky:  The risk of doing nothing could erode your cash’s value over time.

  2. Volatility: Short-term market fluctuations are normal but tend to even out over time, emphasising the importance of staying invested.

  3. Longevity: For couples, there’s a 50% chance one partner will live to age 90—making a long-term income strategy essential.

  4. Sequencing Risk: Timing withdrawals during retirement requires careful planning to avoid depleting your assets prematurely.

What This Means for Your Portfolio

What This Means for Your Portfolio

With markets adapting to new norms, a balanced and diversified approach remains crucial:

  • US Market Focus: While US equities remain a core component, avoiding over-concentration in sectors like AI is vital. Just 7 companies make up 33% of the S&P 500 index and contributed 55% of all the returns of the S&P500 in 2024 – the largest concentration in history.

  • Employ Active Managers: Passive investors have had a great run, especially if invested in US equities but as we have already seen this month the AI Titans have sold off on one piece of news from China. Active managers will control these concentration risks.

  • Global Bonds: High yields make bonds an attractive addition to portfolios, particularly for those seeking income and stability.

  • Alternative Investments: Assets like gold can provide a hedge against geopolitical risks and inflation.

The Spectrum IFA Group

I would very much like to thank the investment management teams at RBC Brewin Dolphin, Rathbones Investment Management, Evelyn Partners, New Horizons, Alquity Investments, VAM Funds and Prudential International for their time and expert views for the content in this update.

Here are some links to other articles supporting this summary if you want to dive deeper into the details:

US Continues to Outperform https://www.evelyn.com/insights-and-events/insights/can-us-outperformance-continue/

A look back on 2024 https://www.evelyn.com/insights-and-events/insights/2024-investment-review-ifa/

Trump 2.0 https://www.lgtwm.com/uk-en/insights/market-views/trump-politics-the-global-order-250934

The excellent monthly Rathbones Sharpe End Podcast https://www.rathbonesam.com/uk/sharpe-end-podcast#podcasts

Nice-Cannes Marathon 2024

By Peter Brooke
This article is published on: 2nd November 2024

02.11.24

Run with Purpose: Peter Brooke and The Spectrum IFA Group Take on the Nice-Cannes Marathon 2024!

On November 3rd, Peter Brooke from The Spectrum IFA Group will proudly run with The Run for Hope Team in the Nice-Cannes Relay Marathon. For years, Peter and Spectrum have embraced this challenge, raising awareness and funds for a cause that deeply resonates with them.

The Run for Hope team, is a partnership between Mimosa and Cancer Support Group 06, brings together a community of runners from beginners to experts, inspiring teamwork and fun to raise funds for cancer support by running in the Nice-Cannes Relay Marathon. Participants enjoy comprehensive training, support and a festive after-party, all contributing to a great cause, the support of cancer patients on the French Riviera.

As experts in financial planning for English speaking expatriates living in Europe, The Spectrum IFA Group provides comprehensive and personalised financial advice, and planning. Peter, who has been with Spectrum for 20 years on the French Riviera understands the complex financial and tax issues his clients face and he and Spectrum are dedicated to helping you navigate these challenges.

By participating in the relay marathon, Peter and Spectrum demonstrate their commitment to the broader community on the Côte d’Azur. Supporting The Run for Hope Team allows them to blend their professional expertise with their passion for making a difference. Cheer on Peter and the whole Mimosa team as they run for hope, showcasing the same dedication they bring to managing your finances.

Together, we can achieve great things—both on the marathon route and in your financial journey!

The Spectrum IFA Group: Running for Hope, Running for You!

2024 Market Update

By Peter Brooke
This article is published on: 28th July 2024

28.07.24

One important point I would like to make is that many global issues, especially Politics and the outcome of the many elections we have in 2024, might feel very important to us on a day-to-day basis but might have a very different impact on investment markets and so do please read the following through the lens of investing.

Global equities have been performing well, with US equities gaining 15% in the first half of 2024, led by companies like Nvidia, Microsoft, Alphabet, Amazon, Meta, and Apple, which contributed significantly to market progress.

The economic outlook indicates that the global economy is expected to grow by 2.6% in 2024, with improved growth prospects in the US and China due to factors like loose fiscal policy, immigration, and government stimulus programs.

Market ‘breadth’ has been a concern, with the above five technology stocks driving over half of the returns in the US market; as global growth continues this should lead to opportunities in other sectors like industrials that are connected to the Artificial Intelligence theme; very recently we are starting to see a broadening of market returns.

Market risks related to inflation and interest rates are expected to shift to a positive tailwind in the second half of the year, which should be good for both shares and bonds. Central banks, like the European Central Bank (ECB), are already cutting interest rates and others are likely to follow suit.

Here is a chart of four different Risk Benchmarks and the main UK and US Stock markets so far in 2024; steady, but the US continues to serge ahead… for now.

Risk Benchmarks and the main UK and US Stock markets so far in 2024

Inflation

inflation

Inflation hasn’t yet returned to pre-covid levels and is unlikely to drop back this much any time soon. Goods, energy and food inflation have all fallen but services inflation is still high, though this has started to fall slightly in recent weeks. ‘Services’ includes ‘shelter’ e.g. rent and other services such as hospitality.

Interest rate cut forecasts from the ‘experts’ have see-sawed so far this year but the current consensus view is that the first US interest rate cut should now be expected in September. The ECB has already started cutting rates, very slowly, and UK rate cuts might be pushed out into 2025 as services inflation in the UK remains ‘stickier’ than elsewhere.

elections

Elections

Elections do pose sporadic risks to markets, though normally election results don’t truly matter in the longer term; but with the huge volume of elections this year and the swings from left to right (and back again) the volatility caused by the outcomes of elections will probably have much greater short-term impacts than normal.

US – The upcoming election is a key risk, with potential market volatility depending on the election result, especially following the attempted assassination of Donald Trump and the withdrawal of Joe Biden.

If Kamala Harris is selected as the Democratic candidate then Democratic party policies are likely to remain unchanged and so volatility in markets could be short lived, but if they enter the time consuming process of selecting a different candidate (increasingly improbable at the time of writing) then the inevitable political uncertainty could drive US share and bond volatility for longer.

According to the polls and bookmakers the Republicans are now more likely to win, but what might that mean for investors? Potential tax cuts, more deregulation, more protectionism and more oil drilling could be good for US corporate profits and might help bring down inflation. This might not be great for the planet and society but could be good for business.

In addition tariffs on goods entering US from China (and the rest of the world) could add to the short term inflation problem.

Europe – there has been a backlash against various EU led initiatives, like climate change policy and immigration leading to a swing towards the right in many countries.

France – President Macron called a snap election as the Far Right were gaining traction in EU elections; several left wing, centrist and right wing alliances formed as tactical voting led to a deadlock. The major coalition is now on the left of the house which is probably negative for French investment returns but any law changes are very unlikely for at least 12 months when another round of elections is expected.

UK – the new Labour majority government was not a big surprise with ‘time for change’ as a leading driver; but will they be able to do what they said they would do? So far they remain quite centrist and don’t appear to be planning on drifting back to the ‘old labour’ way. They are likely to be more fiscally responsible and will target growth BUT can they actually do it as the challenges are significant and the budget is tight – for example the demands on the NHS and the hot potato of immigration.

There might, however, be a big shift with the relationship with Europe, which must be positive for both sides, especially with respect to defence, cybersecurity and trade and even more so if the US becomes more self protectionist under Trump.

Currency

Currency

Here are some thoughts from our friends at Moneycorp:

As many predicted the Labour Party secured a strong majority, and the FX markets remained relatively stable. We’ve seen GBP strength, with GBP/USD rising by 1.7% and GBP/EUR up by 0.8%.

The French election results, however, were unexpected. We had anticipated significant market movements, but the outcome has been a 3-way hung parliament, with all other parties joining forces to prevent the far-right Rassemblement National (RN) from gaining power. This situation suggests potential political turmoil in France for at least the next 12 months until another election can be called. This is not a favourable outcome for President Macron or Europe as a whole. Despite this, the FX markets have remained stable, as the EUR had already weakened prior to the election.

Inflation data and interest rates continue to be the primary drivers of the FX markets.

Here is a Forecast Snapshot of where the banks think FX markets will be at the end of Q3 (30th September).

GBP/USD
Current 1.2840
Barclays 1.28
UniCredit 1.26
Wells Fargo 1.26
BNP Paribas 1.27

GBP/EUR
Current 1.1860
Barclays 1.22
UniCredit 1.16
Wells Fargo 1.19
BNP Paribas 1.20

EUR/USD
Current 1.0825
Barclays 1.05
UniCredit 1.08
Wells Fargo 1.06
BNP Paribas 1.05

I am, once again, very grateful to the teams at Evelyn Partners, Rathbones, New Horrizons and Moneycorp for their help in putting this summary together and hope it is useful in framing where we are today and how we got here.

Here are some further links to supporting views on the above:

https://www.evelyn.com/insights-and-events/insights/investment-outlook-july-2024/

https://www.rathbonesam.com/knowledge-and-insight/review-week-biden-bows-out

https://www.rathbonesam.com/blog/guess-whos-back

If you listen to podcasts I can highly recommend the Sharp End Podcast from David Coombs at Rathbones Asset Management

ask me

Talk to me

As always, please remember that financial decisions should be made with careful consideration of individual circumstances and professional advice, I am here to support you.

If you have missed any previous news and updates these can all be found on the archive page here.

I am away on holidays until 5th August but if you have any questions or need further assistance, please feel free to reach out via the below channels, or the booking system – always drop me a quick message if you need a time slot outside of those available.

For now, have a great day, and a wonderful summer

Best regards

Peter Brooke

The Financial Review Process

By Peter Brooke
This article is published on: 9th July 2024

09.07.24

… why, what and how …

Whether you are an existing client of mine or not, and following on from my previous article on ‘The Value of Seeking Financial Advice’, I wanted to take this opportunity to go through the steps in our ‘Client Financial Review Process’.

The Financial Review Process

WHY?
Firstly, and most importantly, it’s crucial to regularly check in on your financial journey, ensuring that we’re on track to meet your goals.

Secondly, we have a regulatory obligation to conduct a review at least once per year for all of our clients, whether this is in person or remotely.

Thirdly, we have a relationship which is built on trust and my understanding of, often, very personal details, so a regular catch up is a great way to nurture this relationship and ensure important issues are raised and discussed; and its a good excuse for a cup of tea and a biscuit [even if via Zoom].

WHAT?
A review won’t just be looking at what has happened over the last year but is designed to identify potential financial planning adjustments we might want to make if your circumstances are changing.

The review should, and will, include the following:

  • An update of your situation – incomes, bank balances, asset values, expenditures.
  • Changes to your situation – retirement, moving house, changing jobs, school fees etc.
  • Cash Flow planning update – are we still on target to meet your goals? … “am i going to be ok, and if not what do I need to do to make sure I am?”
  • Investment Portfolio performance update – has it out-performed or under-performed the risk ‘benchmark’ we have allocated? If so, why? Are any changes needed?
Financial review

HOW?
Many of my clients have been through this review process over the years but I have made a few tweaks and so I wanted to take you through the steps.

The biggest change for us is that I will be asking many of my clients to update their situation directly onto the Secure Cash Calc Portal prior to our review, so I have the most up to date information in advance. This will give me a chance to review your situation before our meeting to ensure we get the most from our time together.

Of course it is not obligatory to use the portal as it is not appropriate for everyone, but if you would like to then do let me know.

The following summary explains each step.

The financial review process

Options for you…
The above summary is focused on the normal Face to Face or Zoom meeting review process, but I can also provide your review as an email or I can even record a video presentation of my update on your portfolio and cash flow plan which you are then free to watch at your leisure; then we can discuss any steps necessary and update any administrative requirements afterwards.

Please do let me know if you prefer to have an email or video review?

cashcalc

As you can see, it’s a collaborative process and financial reviews are a great way to check-in on how things are going and where adjustments need to be made, so if your situation changes, please don’t wait for the next review, get in touch and we can review early.

If you have any questions please use the the below channels, or the booking system – always drop me a quick message if you need a time slot outside of those available.

If you have missed any previous emails, click here to access the Archive.

For now, have a great day,

Buying your dream home in France – webinar

By Peter Brooke
This article is published on: 20th June 2024

20.06.24

I have worked with many of the panelists for a number of years and their knowledge and experience is valuable to me and my clients; so if you are looking at buying and/or relocating to France then please join us for this live webinar.

Our experienced panelists are here to discuss all nature of topics to do with buying and relocating to France:

Karen Tait – Webinar host
Peter Brooke – Wealth & tax planning from The Spectrum IF Group
Joanna Leggett – French Property Expert from Leggett
Jonathan Watson – Currency Expert from Lumon
Paulette Booth – Banking and insurance expert from AXA
Tracy Leonetti – Visa & paperwork expert from LBS
Sharon Revol – Mortgage expert from Cafpi

The Value of Seeking Financial Advice

By Peter Brooke
This article is published on: 26th March 2024

26.03.24

The personal financial advice industry has often been regarded as a home for insurance salesmen in shiny suits or as an out-of-reach luxury for the very wealthy. It hasn’t helped with various mis-selling scandals over the years and high levels of hidden fees, but after 25 years in this industry I wanted to make the case as to why we are not all the same and show what true value can be taken from seeking professional advice.

Fortunately, our industry has changed a lot over those 25 years and transparency, communication and ‘putting the client first’ have now become the values most of us live and work by.

As a little background, I wanted to be a Vet or a Doctor when I was at school, I loved science and maths but didn’t truly focus enough on my A-Levels and was found wanting when it came to getting into Medical School. I ended up studying Molecular Genetics at Sussex University but discovered that I also didn’t want a life in a lab. As a ‘frustrated Doctor’ I ended up in Pharmaceutical Sales… great fun as a young man straight out of Uni but it became a very demoralising job and one which I discovered was really all about making money, not helping people.

which way to go

I was encouraged by a family friend to look at stockbroking or financial planning as a change of track and started work in 1999 (dot com!!) at an investment advisory business in London. We introduced the UK’s first ‘advisory-discount’ services where we would provide personalised investment recommendations at discounted fees.

Ironically, it took moving to an industry that concentrates solely on money to realise that I could actually help people achieve wellbeing and peace of mind through my abilities to discuss and explain complex issues.

In 2004 I moved to France and started working with The Spectrum IFA Group, helping English speaking expatriates to create and realise their plans for living in France, I have been here ever since. I especially wanted to join a fully regulated company which gave me the independence of my own business and together we have grown to where we are today – 50 advisers operating across Europe, in France, Spain, Portugal, Italy, Luxembourg, Malta and Switzerland.

it gonna be OK

What should we, as financial advisers, aim to provide to our clients?

I believe our true value lies in helping our clients answer two main questions:

1. Am I going to be ok, financially, and if not, what do I need to do to make sure I am?

2. What have you, as my adviser, done for me?

The first question is the core of a good adviser’s skill set and business strategy – it is all about helping identify and plan for different stages of life. Correctly laying out a ‘roadmap’ for the future and asking the difficult questions; this can truly provide the peace of mind that you, as my client, are on target, and if not what do we need to change or compromise on to ensure you get there.

This roadmap then needs ongoing reviews, especially as life throws various obstacles at us along the way.

The second question is the ‘HOW’ of the first question. Historically we have valued good advice, and what we pay for it, as a percentage measurement of investment performance, which the adviser actually has minimal control over.

I believe it is more nuanced than this and can be broken down to six key areas in which we can (and should) add value and help answer that first very important question:

We help to bring order to your financial life by assisting setting budgets and cash flow targets as well as overseeing and reviewing investments, insurance, estate plans, taxes, etc.

We are a sounding board to help you follow through on your financial commitments, by identifying and prioritising goals, and then explaining, in plain english, the steps to take, and then regularly reviewing your progress towards them.

We offer insight from the outside to help you avoid emotionally driven decisions in important money matters; we are available to consult with you at key moments of decision-making, providing the necessary research to ensure you have all the information to make the best choices.

We help you anticipate life events and changes and be financially and emotionally prepared for them. We can help in creating, ahead of time, the action plan necessary to address and manage any life transitions that inevitably appear.

We explore what specific knowledge will be needed to succeed in your plans by understanding your situation and then providing the necessary resources to facilitate your decisions, and explaining the options and risks associated with each choice in a clear and simple manner.

We aim to help you achieve the best life possible but will work with you, not just for you, to make this possible. We will take the time to clearly understand your background, philosophy, needs and aspirations and will work collaboratively with you and on your behalf (with your permission, of course).

Upfront about what it costs

For me, helping people is at the centre of my personal values – being paid to do this is a welcome bonus and I have long believed that our jobs find us, not the other way round. I have always been a bit of a ‘planner’ and see ‘the big picture’ in most situations – helping people see that ‘they are going to be ok’, or explaining ‘what they need to do to get there’ is a truly pleasurable challenge for me.

Price is what you pay, Value’s what you get

I firmly believe my clients get value for money. In Europe we are not regulated to handle client money so will never send you a bill for you to pay us directly.

Spectrum is remunerated by the insurance or investment company which provide the final financial solution to you and with whom you have a direct relationship, with us ‘appointed’ as your adviser.

I believe in transparency of all costs and charges so you know exactly what you are paying and to whom. Our charges are competitive, we only use clean share classes of funds so there are no hidden or double fees.

Making the time – ‘How can I help?’

I live and work in a community of English speaking expatiates where referrals and recommendations count for a great deal. I always feel very proud and grateful when an existing client refers me to another family member or friend who might be able to benefit from the services that I offer. So thank you for trusting me with them and I look forward to helping more in the future.

Snapshot of our services

  • Financial Planning & Budgeting
  • Family protection
  • Cash Flow Planning
  • Investment Management Advice/Guidance
  • Tax optimisation through tax efficient products
  • Estate & Inheritance planning
  • Risk Management, diversification & asset allocation
  • Retirement planning
  • Education cost planning
  • Long term care planning
  • Pension advice including transfer and consolidation

If you know someone who might need our services, feel free to get in touch and forward them this email – the link above can be used to book a 30 minute call with me directly. If I can’t help then I may be able to direct them to someone who can.

If you have any questions or would like a catch up then please use any of the below communication channels or the booking system – always drop me a quick message if you need a time slot outside of those available.

For existing clients the CashCalc secure portal is a great place to update any information, send me documents or even a direct secure message.

If you have missed any previous emails, click here to access the Archive.

The view from the Danube

By Peter Brooke
This article is published on: 4th February 2024

04.02.24

2024 marks my 20th year as a financial adviser at The Spectrum IFA Group and I am lucky to have been invited to every one of our annual conferences since I joined in June 2004. Last week more than 40 members of the Spectrum family got together in the beautiful Hungarian city of Budapest for our latest conference.

We are always delighted and grateful to welcome excellent external speakers from some of the big investment and insurance firms we work with throughout the year who share their wisdom (and/or best guesses) for the months and years ahead; it was therefore an ideal time for me to pick brains over some goulash and a glass of wine and bring you some considered observations for investing in 2024.

But before looking forward, let’s look at how we got here.
2022 was a very tough year for investors with the hangover from the Covid pandemic and the war in Ukraine creating a perfect inflation storm which led to the most aggressive interest rate hiking cycle in over 40 years. This significantly depressed bond and share values.

Through 2023 there were four distinct periods of rhetoric and market behaviour… it started with the Artificial Intelligence (AI) “revolution” and a huge rally in the “Magnificent 7” stocks in the US, then attention turned to likely recession… but was it going to be a “soft or hard landing” and then a considered period of ‘is this the end of inflation?’ followed by a change in attitudes to try and guess when the first interest rate cuts would start… we even ended the year with a ‘Santa Rally’ in global stock markets…. confusing times!

“Anyone who isn’t confused really doesn’t understand what’s going on!”

  • In 2024 nearly half of the global population will be going to the polls; will this influence investments?
  • Can we avoid a recession, and if not, what will it look like?
  • Will interest rates be cut and if so, what does this mean?
  • Is AI really going to change the world?

Most of the investment managers we spoke to last week had the same view on these sorts of questions…

Politics rarely has a material long term effect on investment returns but can create short term uncertainty and opportunities – be active and don’t get caught up in the hype!

Recession

  • Soft Landing = inflation comes down and economic growth is moderate – the ‘Goldilocks’ scenario
  • Hard Landing = inflation comes down but the economy shrinks – leads to higher unemployment, default on debt and lower consumption

The consensus view is that we will probably avoid a hard recession, especially in the US, which is still the most important economy on the planet. US households still have high levels of savings and long-term debt structures, so aren’t too affected by higher short term interest rates; unemployment remains low and the ‘Inflation Reduction Act’ is still pumping money into the economy.

However, there is a case for a hard landing with some indicators predicting one, but we live in a world of probability and not certainty and this is changing constantly.

“Don’t be too pessimistic but remain cautious … and don’t be too optimistic… anyone still confused?”

We are at the end of the inflation cycle now and so interest rates are likely to start being cut in May (US) and June (Europe). This will be good for bond values, so don’t sell them now.

Artificial Intelligence will destroy some businesses and will make some very profitable. “It’s like internet 2.0”. It is also unlikely to be the companies that ‘started’ the AI revolution which will do best from it… it will be the companies who best embrace it and who create the infrastructure for it, that will profit most.

Demographics – nothing has changed – there are more of us than ever and we are living longer… and the Obesity epidemic is not cured by one or two weight loss drugs, there is a long way to go.

Retreat from globalisation
“Protectionism”/“MAGA”. We are not going back to globalisation and is it a coincidence that geopolitical instability has also increased? The world is a more dangerous place – we must consider greater Geopolitical risk.

So, with all these factors to consider how do we invest for 2024?
Retreat from globalisation = Defence companies and Oil producers, this might not sit well with all investors.

  • AI = hardware, chip makers, nano technology, semiconductors
  • Demographics = MedTech – improved prevention and treatment efficiency as opposed to just buying more drugs
  • Hard Recession = own government bonds! Also own high quality equities – be active
  • Soft or No Recession = own equities – but avoid those with high debt – be active

Even with all of the confusing narrative there are some reasons to be positive in 2024:

  • Geopolitics will remain the same, protectionism will continue
  • Interest rates are moving back to ‘normal’
  • Strong labour market
  • Housing set for recovery…. Falling interest rates
  • Productivity growth from technology and AI – leads to greater profits
  • Markets go up 70% of the time

“Look through the hype and stick to your own personal investment commitments and goals … oh… and employ an active manager!!”

I would very much like to thank the investment management teams at RBC Brewin Dolphin, Rathbones Investment Management, Evelyn Partners, New Horizons and The Prudential for their time and expert views on the content in this email.

If you would like to dive deeper into these subjects please check out the following links:

5 Investment themes for 2024: from Evelyn Partners

Some predictions for the year ahead from David Coombs at Rathbones

If you like podcasts then I highly recommend David Coombs amusing and insightful monthly Sharpe End Podcast

Feel free to get in touch if you have any questions via the below channels, or the booking system – always drop me a quick message if you need a time slot outside of those available.

If you have missed any previous emails, click here to access the Archive.

For now, have a great day, speak soon…

Spectrum supporting Mimosa Matters

By Peter Brooke
This article is published on: 25th October 2023

25.10.23

The Nice to Cannes Relay Marathon

As we gear up for the upcoming Nice to Cannes Relay Marathon on November 5th, I wanted to take a moment to share with you the reason behind my choice to support Mimosa Matters, a charity that holds a special place in my heart.

In a world that often seems to move too quickly, community stands out as a pillar of strength and support. It’s a reminder that we are not alone and that, together, we can make a meaningful impact. The Nice to Cannes Relay Marathon embodies the spirit of community, with individuals coming together to achieve a common goal through teamwork and perseverance, and having a bit of fun together through the aches and pains.

Don’t worry, I am not running the entire Marathon – that would be crazy – I will leave that for those whose fitness levels are way better than mine!

I am running the final 6.4km leg…. some might say the ‘taking-all-the-glory-leg’… for Team Early Birds, a gang of super women who are doing all the hard work over the proceeding 35.6km; if you have a spare euro or two, please do consider empowering our legs to carry us all to the end by helping us raise some funds for the important work that Mimosa undertake.

The fundraising link for our team is here

I was hoping to run a longer leg but a recent bout of bronchitis and a lower back injury have curtailed my training a little but I am back hitting the tarmac again and as I lace up my running shoes for my leg of the Relay Marathon, I am not just running for personal achievement; I am running to try and make a difference.

Mimosa Matters shares this commitment, and by supporting their cause, we can collectively contribute to creating a stronger, more compassionate community.

Your contribution, no matter the size, will help make a positive impact on the lives of those in need. Together, we can run towards a brighter and more connected future. Of course, please don’t feel any pressure to contribute at all… instead perhaps share this email or come and encourage us all on the road a week on Sunday, you won’t miss us, we’ll all be in bright yellow.

Why Mimosa Matters

Spectrum and I have chosen to support Mimosa Matters again because of the incredible work they do in fostering a sense of community and making a positive difference in the lives of others. Mimosa Matters goes beyond traditional charity by actively engaging with local communities and addressing their specific needs in the fight against cancer.

They work closely with local cancer professionals & associations to create and fund projects to increase awareness of the causes of cancer and to channel funds into cancer research and into associations that directly support patients and their families living with cancer in our region.

Sadly, too many of us have been directly affected by this relentless disease and we must stand, walk or run together to try and stop it.

Please follow these links if you would like more information about Mimosa Matters
https://www.mimosamatters.org/
and the Marathon https://www.mimosamatters.org/project/nice-cannes-marathon-2023/

And, in case you missed it, the all important fundraising link again for our team is here
https://www.helloasso.com/associations/mimosa/collectes/team-early-birds-running-for-mimosa

Facebook

https://www.facebook.com/mimosamatters and https://www.facebook.com/financial.advisors

Thanks for taking your valuable time to read through this, I really appreciate it.

Mimosa Matters

Finance update Q3 2023

By Peter Brooke
This article is published on: 13th October 2023

13.10.23

After the more optimistic start to the year when stock markets, especially in the US, showed resilience and the roots of recovery from a horrendous 2022, the summer was much more mixed. The Bank of England and the US Federal Reserve didn’t raise interest rates in September, though the ECB did but from a lower level.

August was much more volatile than expected with investors trying to work out if inflation had peaked and if central banks were done with their unprecedented interest rate hikes, and when they might start thinking about cutting rates.

The oil price has also settled at a higher-than-expected level, which might be a sign of increased economic activity, but it doesn’t help to get rid of sticky inflation.

inflation

Higher for longer

Interest rates are a means of dealing with inflation. Central banks raise rates to increase costs and reduce spending power with the aim of lowering demand and squeezing prices. This is an art rather than a science. Central banks need to find the right balance of weakening demand, while avoiding a recession. This has proved fiendishly difficult and tackling inflation has seldom been achieved without some economic pain.

We are currently in the eye of the storm. Over the past 18 months, global interest rates have moved from near zero to over 5% in some places. Inflation is coming down and interest rates may have peaked, but monetary policy operates with an unpredictable lag. It is difficult to know how much of these interest rate rises have fed into the economy and whether a recession is just round the corner.

Investors will have to start getting used to these elevated levels of interest rates for longer as the consensus opinion is now that interest rate cuts won’t come quickly and won’t be significant until inflation is firmly under control. We are still very much in a holding pattern.

Is my money safe?

So should I keep my cash in my bank?

Of course, one of the few benefits of these hikes in interest rates is that you can now achieve some positive return on cash, which hasn’t been possible for around 15 years!!

I am having a lot of conversations with people asking why they should consider investing rather than leaving money in the bank.

This is a very good question… equity and bond investors have had very little, if any, positive returns since January 2022 so why invest now when I know I can now get returns on cash?

For someone with a very short-term time horizon, and therefore a very low risk profile, then cash earning around 5% will look attractive. Clearly tax is an issue, which will diminish this return but still it is at least a certainty.

What about those with longer time horizons – should they stay in cash given the high returns relative to recent history?

There are several considerations here:

1. Sticky Inflation

If base level inflation is to remain higher for longer then we still need to consider the NET return you will be getting on your cash.

Here is a chart showing UK Inflation and UK interest rates over the last 30 years – even today inflation, though falling, is still above base rates:

Inflation matters

Put another way – if we take one away from the other we can see that the REAL return on cash today is still negative (the green line) – that’s a guaranteed loss of 3.75% over the next 12 months.

The difference between interest rates and inflation

Put another way again… what can you buy in 5 years if things remain as they are today? See below for a real world example of how inflation affects us all:

Money illusion

2. Other investments should do better…

BONDS:

Most investments are valued versus the ‘risk-free’ rate of return (ie cash).

So when cash was paying you 0.1% many investors were happy to accept 1.5% to 2% from high-quality investment grade bonds, even though they come with a little more risk….

… so there is a strong case for buying bonds today yielding 6% to 7% because we are happy to be paid the extra 1.5% to 2% for the extra risk we are taking… this is exactly where bond ‘yields are today’.

Bond yields

SHARES:

Though more volatile, shares have always outperformed cash AND inflation over the longer term.

Investments in shares
Initial investments

And expectations over the coming years are that shares will continue to outstrip returns on cash:

Equities will return more than cash

In Summary

We feel that we are getting closer to understanding a little more about how the future might look. Inflation seems to have peaked but will remain sticky for a while, which will mean interest rates are likely to stay higher too for longer than originally thought.

The chance of global recession is still there but nor lower and the consensus appears to be that it will be soft and short if it emerges at all. This can be good for stock market performance but in the meantime cash and bonds are, for the first time in a very long time, a genuine investment option; though sticky inflation must be taken into account when choosing how much to leave in cash.

Inflation is a financial reality that we all need to navigate. By proactively addressing this challenge and exploring investment opportunities that protect your wealth, we can work together to ensure your financial future remains secure.

If you have capital to invest for longer than the next couple of years then an actively managed multi asset approach should be considered to minimise the effects of inflation on your hard earned funds.

I would very much like to thank the investment teams at Pacific Asset Management, Rathbones Investment Management and Evelyn Partners for their input into this data and summary.

If you would like to dive deeper into these subjects please check out the following links:

3rd Quarter Outlook from Pacific Asset Management

Why do interest rates and inflation matter for investors from Evelyn Partners

Will interest rates plateau after peaking from Rathbones

Feel free to get in touch if you have any questions via the below channels, or the booking system – always drop me a quick message if you need a time slot outside of those available.

If you have missed any previous emails, click here to access the Archive.

For now, have a great day, speak soon…

Introducing your Client Portal

By Peter Brooke
This article is published on: 5th October 2023

05.10.23

CashCalc

What is the Cash Calc Secure Client Portal?

Cash Calc was launched back in 2014 by a UK IFA who was unimpressed with the digital tools available to our industry. It was initially launched as a Cash Flow Planning Calculator – more on this later, but has developed into a broad suite of great tools for advisers like me and their clients.

“seek first to understand, then to be understood”

In order to best advise my existing and future clients I need a full picture of their current situation and an understanding of their objectives, aspirations and goals – we rather boringly call this ‘fact finding’… though it is not all just facts!

A recent addition to the Cash Calc tools is the ability for my clients to complete or update their own fact find in their own time from the comfort of their own homes via the Client Portal, if they want to. It is totally secure and can be updated as little or as often as necessary.

We can also use the portal for the secure sharing of documents, like investment statements, passports, utility bills etc AND for secure two way messaging.

For those who prefer not to use this service, please don’t worry, I will still use it as a data storage tool but will manage the access and information myself.

Please check out this video for more:

Hop Onboard

If you are already ‘onboarded’ and have your Portal login details please do have another look and send me a quick message (top right corner of the screen) to say hi and confirm it is all working OK.

Some of my existing clients have stated a preference to have their quarterly investment statements shared via the portal as a more secure option than email – please don’t hesitate to let me know if you prefer this too?

If you are not yet ‘onboarded’ please don’t worry, as part of our review process I will be sending you a personalised ‘secure invitation’ to the portal to set it all up; it is very easy.

Of course, if you just can’t wait please drop me a line and I will send your personalised login details immediately.

cashcalc onboarding

Cash Flow Financial Modelling Tool

As mentioned above Cash Calc started as a ‘Cash Flow Planning Calculator’ and though it is now so much more, this remains one of the most powerful and useful tools for creating truly personalised financial plans.

Using the ‘fact find’ data you provide in the portal I can create multiple bespoke cash flow plans to look at various scenarios and forecast how your financial situation will evolve over time.

“can I afford to retire now?”
“can we pay for our daughter’s wedding?”
“can we fund our Grandchildren’s education?”

We can see graphically where you are today and what changes, tweaks or decisions need to be made to ensure you will be ok long into the future.

Cashcalc1

Why I love it…

  • Its not time critical – you can upload and enter your details in your own time, at your own pace
  • Totally Secure – bank level encryption, customised for the Spectrum IFA Group
  • Simple interface between us for sharing of documents, messages and, most importantly, for uploading up-to-date financial information
  • I am notified as you make changes to your profile
  • ‘Virtual’ Modelling tool with scenario based examples
  • Very Visual – it’s easy to see how changes will directly impact your situation as we tweak your plans
  • Digitally and securely accept and sign-off on a range of documents
  • Quarterly Financial statements can also be shared here instead of emailed

….. oh, and it has a load of other great tools we can use too…..