2023: A Dire Year for Conservative Investing

Is something better on the cards?

It’s Dr John today, with his first post of the year - coming to you from New Zealand, no less.

Lots of intelligent food for thought - as always.

Enjoy!

Dominic

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Spoiler: I’m going to suggest you do nothing.

The last year was not good for wealth-preservation. A lot of the (one is tempted to say ‘so-called’) wealth-preservation investment trusts Ruffer Investment Company (LSE: RICA), Capital Gearing (LSE: CGT) and Personal Assets (LSE: PNL) produced below-inflation returns or, worse, fell in absolute terms.

Others, like infrastructure trusts that were supposed to protect investors by offering inflation-protected dividends, fell dramatically. Gresham House Energy Storage, once a market darling (LSE: GRID) has almost halved since the beginning of 2023. It’s now below its value in the depths of the COVID crisis. RIT Capital Partners (LSE:RCP), which is riskier, but also more diversified than the three more conservative trusts mentioned above, also fell.

Most commodities, supposed to do well in times of inflation, also fell dramatically, including oil, gas and agriculture. The Dow Jones Commodity Index fell about 8% in the year. Taking into account inflation, that’s roughly 13% in real terms.

Being diversified last year meant that you suffered losses across multiple sectors.

It seems that only by taking extreme positions in arguably the most overvalued markets - US tech shares - did one achieve anything like a decent return.

What’s happening?