Corrections and volatility are just the price of admission for superior returns, and once again, we have reached that familiar moment where investors everywhere are flailing like drowning swimmers, desperately calling for a lifeguard.
I have always said the real test is not dodging the dips, it is keeping our cool when they happen. I have been around long enough to tell you that it is never fun trying to guess whether a 5% pullback is just a passing drizzle or the start of a full-blown financial monsoon. The best we can do is build and fine-tune our portfolios so that we maximize risk-adjusted returns without losing too much sleep (or hair).
On a related note, a well-timed update from another partner gave me a glimpse of what is brewing elsewhere because if there is one thing markets love, it is keeping us on our toes.
Here is a section:
It is fair to say that European governments of late have been enthusiastic spenders on everything apart from Defence, believing the U.S. would continue to pick up the bill, but at the same time still believing that they would have influence over the direction of policy and that American and European interests and priorities would always be closely aligned.
If they were in any doubt, a new reality dawned during the JD Vance speech at the Munich Security Conference: America no longer shared the same geopolitical priorities nor the same “Davos” political values as the European elites: “And trust me,” said Vance, “I say this with all humour: If American democracy can survive 10 years of Greta Thunberg’s scolding, you guys can survive a few months of Elon Musk.”
European leaders have responded with tough public talk of continuing to support Ukrainian President Zelensky, raising expectations that Europe will plug the gap left by the US suspending its military aid to Ukraine. In private they must know and hope that without US support, Ukraine will be forced to make peace, so that Europe is not on the hook for financing an indefinite war or defending itself from Russia without American support.
So, they had a summit in London where they huffed and puffed and prepared a peace plan to send to Washington, rather than Moscow, which in a typical display of European disunity, the British and the French supported but the Germans and Italians refused to back.
So, the cold reality is that we seem to be heading for an end to the War because this is what Trump wants, irrespective of whether it is perceived as just or likely to last. In the short-term this will be bullish for Europe and particularly Eastern Europe.