“As in mountaineering, the range of things that can happen is extremely wide. Investment is not about taking on a tonne of risk to reach the summit. It is about being able to survive and avoid the descents in markets – whatever the prevailing conditions.”
Commenting on the market outlook, Clay remains concerned by the legacy impacts of now unwinding QE – and the sheer volume of debt built up in some sectors.
“Many companies have spent the time of QE and the abundance of cheap credit to lever themselves up to the hilt. We are back to record levels of corporate debt when the interest cover of that debt is at an all-time low. All this should tell us something, but many prefer to remain ignorant of these facts in the hope of making ever more money.
“Given we have full employment and the longest bull run in history in the US markets, we may have reached the end of the latest economic cycle. Either way, it is important investors design the processes and strategies they can stick to to help them survive a variety of outcomes and difficult environments.”
The value of investments can fall. Investors may not get back the amount invested.
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