‘Long-term view is key when managing people’s money’

Ms Parrinder-Johnson said that she was against something that she called ‘investment hobbyism’, getting into conversations about what might happen tomorrow or the day after.

‘Most of our clients have got long-term horizons. So while I don’t particularly like speaking about what might happen next week, I do like speaking about characteristics,’ she said.

One important characteristic currently in the market is inflation. ‘For me, the question of how inflation might affect markets over the long term, is – is this just a flash in the pan? Is this something sustainable?’

It is a change from over the past five years where the market benefited from low interest rates. Ms Parrinder-Johnson said that while people were uncomfortable with the current inflation rate, looking ahead 20 years, how much of an overall impact would it have?

The characteristic of distribution was one that is not talked about enough, she said, referring to both the distribution of things and the distribution of emotions. She cited social media as an example. ‘Facebook dropped 26% in one day,’ she said. ‘That tells us something about the valuation.

‘I use Instagram – it distributes a life that you want to lead and a way of making you feel better about things, in a community you like. It’s not just a technology stock that’s doing well, it’s getting more subscribers.

‘What I’m thinking about right now in terms of the road ahead is, has that characteristic changed? Are we thinking differently about how we get stuff, whether that’s emotional or monetary – that’s the biggest challenge we face.’

Ms Parrinder-Johnson said that because the market has been treating these as just sets of stocks in tech companies, there was volatility. There was a lot of liquidity in the market, from people who wanted to invest because low interest rates were not offering returns on regular savings.

‘Potentially, we are now seeing that reverse,’ she said.

She concluded that the combination of volatility and liquidity, coming up against each other, was causing movement in the markets.

‘To bring it full circle, things are getting more volatile. So the biggest challenge that we face in a conversation with our clients with these long-time horizons is don’t look at what’s going to happen tomorrow. Instead, think what the big themes are.’