Perhaps I should have waited until St Leger's Day - the horse racing classic and age-old portent of improving market conditions - had passed on 12 September before returning to work. Anyone following the advice to sell in May would have saved themselves a few quid this year - the FTSE 100 is around 10 per cent lower than its late spring peak. That said, liquidating an entire portfolio for a few months is neither an easy or cheap business - capital gains tax being one obvious obstacle. And whether now is the time to buy back in and recover those losses isn't clear either, although the receding threat of an imminent US rate hike, and the prospect of more stimulus in Europe and Asia, has given markets a boost as we head to the press.
However, it would be foolhardy to rush back into markets on the basis that the recent market upheaval was merely a summer blip and that more cheap money will save us all. As one economist, Benjamin Tal at CIBC World Markets, wrote: "The recent market volatility should not be seen as a one-off event, but rather as a symptom of significant ongoing change in the trajectory and composition of global economic activity." Citigroup's economists even go so far as to put a 55 per cent chance on a global recession in the next two years, a bold claim at odds with many other houses but one worth heeding nevertheless - there is little doubt that global growth is slowing as China's infrastructure splurge and the accompanying commodities boom abate, and that's dragging many producing nations down with it. Many of these are emerging markets - although developed economies are feeling the pinch too, not least Australia and Canada, which fell into recession this week.
Yet perhaps, as Simon Thompson wrote last week as I relaxed in the Lakes, there will be another lust hurrah before the six-year bull market comes to an end - the US and UK economies so far remain robust, and the damage of falling commodity prices and the impact on producing nations is offset by the economic boost they bring elsewhere. But perhaps, given the spreading gloom, it is also time to consider how we protect our portfolios against rough seas ahead, and a market bounce could provide a good opportunity to do so. I read last week interest that well-respected small-cap fund manager Gervais Williams had recently extended a put option designed to protect against a falling FTSE 100 - traded options allow private investors to do the same; we'll be exploring this and other insurance strategies in the coming weeks.
