Is unpredictability the new normal?


UBS Investor Watch - Hong Kong market insights

Over the past 12 months, there have been many unexpected events that have had major political, economic and social consequences, including the election of Donald Trump as President of the USA, the UK’s vote to leave the European Union, tensions over North Korea, terrorism and natural disasters.

At the same time, discussion continues about some powerful long-term trends, including climate change, a rising tide of populism, the development of artificial intelligence and robotics. Each has the potential to cause significant uncertainty.

UBS Investor Watch, our international study of people with more than $1m to save and invest, looks at how unpredictability is shaping the actions and attitudes of High Net Worth individuals across the globe.

We discovered some interesting findings:

  • 80% of millionaires surveyed felt that we are living through the most unpredictable period in history
  • 80% believe that emotions, rather than facts, drive the decisions of voters today
  • 52% of millionaires are confident their finances will improve over the next 12 months

This edition also explores how HNWIs are responding to uncertainty and the impact it could have on their wealth.

In the meantime, here are four key tactics to help you deal with unpredictability:

  1. Focus on the long-term. Avoid responding to short-term events or distractions. Cutting through this noise has never mattered more, because there has never been so much of it.
  2. Consider all wealth dimensions. Investments, business, family: the wealth dimensions are interconnected and require an integrated wealth planning approach.
  3. Maintain a diversified portfolio. Exposure to a broad range of assets and geographies is essential. It helps to avoid the risks of domestic biases. Adding alternative investments can provide another source of ‎protection against global and regional uncertainty while offering attractive yield opportunities in the mid to longer term.
  4. Be wary of overestimating the safety of cash. Cash may always be attractive, especially in an unpredictable world. But inflation erodes its value, meaning that cash assets can damage your financial health in the long term.

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