Winter of our discontent: Investors might soon find out who is downturn ready and who isn’t
The story of the grasshopper and the ant, which has its origins in La Cigale et la Fourmi by Jean de la Fontaine, tells of the preparations an ant makes during the pleasant weather of summer while the grasshopper merrily sings, only to find herself destitute during the depths of winter.
During this past decade we have experienced one of the longest and most favourable investment climates due to the immense liquidity that central banks around the world flooded the market with. Quantitative easing combined with negative interest rates forced investors to reach for yield and risk in order to achieve a return. However, we are beginning to see this liquidity subside and we were given a hint of the volatility that may follow this past December. Here are some easy ways to prepare.