TS Lombard with the note:
Don’t let your heart rule your head. There are times when one cannot help being emotional, and the last 18months have pushed many of us to emotional breaking points. But when it comes to managing money, introducing emotion into the equation often leads to bad decision-making. (This author was guilty of this way back in 2016 when hewas sucked in to the “liberal metropolitan elite” argument in favour of remaining in the EU.) Right now, the investment process is being tested once again by the surging Delta variant. It is understandable to become emotional when the UK government appears to be abrogating itself of responsibility for managing the spread of the virus and when other countries–especially Russia–appear to have lost control of the virus entirely.
We have written regularly about how we are incorporating the virus into our investment process: at the end of last month we asked whether it still matters for investors (perhaps it mattered too little then; it matters too much now) and in Macro Strategy early last month we focused on the UK, where the first inkling of this latest waveof the virus caused the government to delay reopening. Virus risk is a local macro input, triggering underperformance during resurgence and potential outperformance on reopening. And it becomes a global macro input only if the US begins to suffer.
