Good morning,


Last week’s big news story was the higher than expected US inflation print (more info below), which led markets to their worst day since June 2020 on Tuesday. The contrast with the July figure is interesting – both the reading itself and the market reaction. On 9th August it was reported that US inflation in July was ‘only’ 8.5% YoY, although it wasn’t the ‘0% increase’ that the Biden Administration attempted to spin it as. The positive news helped to send markets up over 3% on that week in August.


The point is, both the above reactions represent trading as opposed to investing behaviours. Whether the July figure was the start of the downward trend and the August figure represents the outlier data point remains to be seen. Or perhaps the opposite is true? However, for the long term investor, making knee-jerk decisions based on single positive (or negative) data release is not good practice. Just as there is not one overriding valuation metric (p/e ratios, eps growth etc) which a fund manager should rely on, there is not a single data point which should inform asset allocation decisions. Operating with a consistent investment process, within a consistent governance framework is much more likely to lead to the best outcomes, for clients, brokers, and investment managers alike.


If you have any questions, please do get in touch.