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08 January, 2021

Astrologers & Oracles

It would not be an exaggeration to say that 2020 was a challenging year.  March and April heralded one of the steepest declines in listed asset values on record, and then against the consensus view, markets staged a very significant recovery over the remainder of the year; in some parts of the world reaching new record heights.  During this tumultuous period, Walden Capital relied upon a very simple philosophy which is based on the premise that predicting the future in detail is only the preserve of astrologers and oracles, and we are neither.

However, we do believe in the economic science of efficient portfolio construction, delivering very competitively costed advisory wealth management and wasting as little as possible on unnecessary costs.  We don’t think you want to be paying for an oracle to be telling you where to invest your money, instead we are firmly of the opinion that relying on decades of academic research into asset allocation is a better use of your budget for ensuring your money grows effectively.  This resulted in 2020 delivering positive performance of between 5% and 9% for all our portfolios.

Of course, the proof of the pudding is in the eating.  Targeted single investments for “fear of missing out investors” saw many invest disproportionately in Amazon or Tesla or other FAANG stocks.  As an aside Tesla is now worth approximately $1,200,000 for every car they sold in 2020! This may have reaped significant rewards in the short term, however the risks associated with such a strategy for many inexperienced investors will be disproportionate to the level of risk they would normally want to take.

In 2020 and over the past 5 years Walden Capital have outperformed our industry benchmarks comprehensively and we have demonstrated that rigorous science works.  We have achieved this by targeting the level of risk you are comfortable with and relying on capitalism to deliver the returns that investors are entitled to for many years now.  We don’t know what the future holds, and we’ve read forecasts that suggest both great things for the future, and a collapse worthy of 2008.  Whether either of those will come to pass is beyond our current knowledge, but we do know that discipline, academic rigour, and a ruthless attention to detail and costs is likely to continue to provide our clients with better client outcomes than the ‘average’ investor experience.

Our performance to the end of 2020 is available here

by John Stirling

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