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Questions & Answers – Part 2

Philip de Lisle continues his conversation with Chartered Accountants magazine Acuity focusing on current markets and speculative assets.

Q: What are you saying to clients about current markets?

  • Many investors are currently accumulating wealth in their portfolios. Any fall in markets means you are buying more assets for every dollar.
  • Other clients are in a decumulation phase where their investments are supporting retirement lifestyle or other needs. In this circumstance drawings are always from the part of the portfolio that has survived the best or has had relative success. In other words, we systematically take profits to fund necessary withdrawals.
  • We provide a very transparent investment strategy and believe in educating our clients to the limit of their curiosity on investment markets. This base of knowledge results in very few calls from worried clients about current events.


Q: What is your view of more speculative assets such as cryptocurrency?

  • We provide prudent investment strategies for clients. Cryptocurrency is speculative because it does not have any basis for valuation.  A bond has a coupon and a company generates profits returned to shareholder by way of dividends or increased company value.  Any return from cryptocurrency relies solely on someone else wanting to pay more for it than you did.
  • The experience for holders of crypto has been hugely volatile.  Fortunes have been made and lost.  Our job is to reduce volatility in client investments and deliver a higher compound return.
  • We like to focus on assets where risk and return are related. We manage risk for clients with a steer towards assets where we understand the probable return and the acceptable variability of when that risk may pay off.  Crypto carries too much uncertainty of getting paid for the risk taken, in our view.


Q: What is the value of advice?

  • I have been working with clients for over 20 years on investment strategies and much longer than that as a chartered accountant. I am convinced of the value of advice.
  • To one degree or another, most of us benefit from a disciplined framework for administering our finances. We all need a plan targeted toward individual objectives and the personal counsel to keep us on track. It is too easy to be influenced by circumstances that we should not react to.
  • Because we have a very statistically based investment framework, we are not tempted to make speculative calls or attempt to time markets – there is way too much evidence that this is folly.
  • Markets reflect all current known information very efficiently. Accordingly, inflation, fears of recession, and geopolitical concerns are all factored into current prices one way or another.  What is unknowable is tomorrow’s surprising news. However, markets surprise on the upside as well as the downside.  Anyone who has seen a simple mountain chart of the growth in markets understands that there are more surprising ups than downs over time.  And this is what we need to position for.
  • There is a volume of data now available mapping multiple factors though periods of inflation, war, and recession over decades for us to draw on in understanding the statistical properties of diversified portfolios. This enables us to incorporate the inevitable volatility and plan with degrees of confidence for clients to meet their investment objectives.


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