View the article online at http://citywire.co.uk/money/article/a661587
Diary of a Dumb Investor: I’m unprepared for a market crash
But grateful that I've held onto my safer RIT and Personal Assets investment trusts should the Italian elections precipitate a lasting market sell-off.
Say – as is quite possible – the inconclusive Italian election result leads to weeks or months of general market uncertainty.
Say the eurozone crisis is properly back.
Now, say only 3% of your portfolio was in cash. Instead it’s almost entirely in shares (80%) – much of them in emerging markets and a couple of big risky UK bets.
How would you feel? Stark naked and exposed to Silvio Berlusconi’s urges, I imagine. Like me.
Standing there without any protection, having not heeded the most basic of health warnings.
Feeling foolish too for being taken in by the unrelentingly chipper market mood of the past half-year.
This is Italian politics, so any of my guesses (or anyone else's) about whether markets will go up or down are fairly useless.
But I do know my portfolio is only really positioned for one scenario: a rise. I'm an insufferable optimist in real life and I've let my sunny viewpoint stain what should be a rational selection of investments.
Judging from history, my emerging market funds will probably fare even worse than a European fund would do if things turn Bunga Bunga style nasty.
My portfolio: Click to enlarge
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