“Clearly, if he does move too far towards protectionism then all bets are off and we will have to take shelter.”
Best foot forward
Bearish or not, wealth managers are still very active in positioning portfolios for the year ahead, perhaps more so now than ever.
What is the best form of defence? How about attack? Not in the sense of recklessly piling more money into risk assets on a short-term downturn but rather getting your teeth into some new investments in genuine alternative strategies.
“Now is the time to get on the front foot and find areas that have gone unnoticed,” says Herberts.
“We are thinking much more about downside resilience and protection, rather than trying to participate in another 20% rally, which we do not think will happen.”
While the consensus is for more market volatility in the 12 months ahead, as has been the same message at the beginning of every year since the financial crisis, Herberts warns that we should not expect any support from valuations.
He says: “You cannot make trades that are based on valuation and expect them to work in three months; they happen over years. When things become stretched, it takes a while for the market to realise it and shake out that euphoria. We are looking more for downside resilience.”
