Kate Rogers: Amid the turmoil, we must remain rational

Investing for the long term is still key in spite of recent political events, argues our columnist

Kate Rogers
Kate Rogers

I did not vote for Brexit, nor did I want a Trump presidency, but that is what we've got. In what were emotive campaigns on both sides of the Atlantic, our societies have been challenged by the binary nature of each vote, which have amplified the divisions in opinion they have created.

It feels like these seismic shifts have been based not only on politics, but also on opinions that people hold more dearly, something more fundamental than a collection of policies. There has been a rejection of the status quo and many have been left feeling disorientated and concerned about what that means for the future of our western democracies. The fault lines across our society remain, with the threat of aftershocks. What is certain is that division is corrosive, and we must find ways to move forward collectively.

I am an emotional person and, yes, I was disappointed with both results. The news from the US feels like an episode of the TV series Black Mirror or House of Cards - or perhaps reality TV meets the White House. Immigration bans, women's rights, fake news, protests: it's a scriptwriter's dream and comedy gold for satirists.

But this is not fiction- this is real life. Both President Trump's policies and the Brexit negotiations are likely to have a considerable impact on investment markets around the world in 2017, so we must sit down and analyse them with cool heads and clear minds.

Investment markets are not the place for emotions. Time and time again it is shown that reacting too quickly or irrationally to news events is detrimental to your financial health. This challenging environment provides us with a useful reminder of our human biases, and I like to think that it helps me become a better investment manager. To do that I'm focusing on three things.

First, the importance of analysis and research, and of taking my time to reach the right conclusions. In an age of big data and quick reactions, it is easy to feel pressured into making speedy decisions. But experience tells me to reflect before I act; that I should pause and analyse the situation.

Second, I'm trying to be more aware of my own biases, avoiding the natural instinct to seek out evidence that supports my existing views. Confirmation bias suggests that in the run-up to the Brexit vote, if you were a remain supporter you might have been more inclined to pay attention to the doomsday forecasts on the economic costs of exiting the Eurozone, than the impact of a leave vote on sterling (down) and by extension the market (up).

To be a good investor, I need to look at all of the evidence, argue the case, make a rational decision and understand the risks of taking that position. Importantly, I must be awake to the possibility of changing my position in the light of further information.

And, finally, I'm definitely putting the short term into perspective. Most of the charities that I work with have decades, if not centuries, ahead of them. Over-focusing on the present will often work to the detriment of the long-term strategy. We are stewards of these assets and should take our time to shape the right future, being rational and avoiding short-term emotions.

Kate Rogers is head of policy at Cazenove Charities

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