Why a bit of risk-free investing can soothe the soul

Steve Sedgwick
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BEING a business journalist for CNBC has upsides and downsides. Every day we get to speak to the biggest players in the global markets. The access we get to the likes of George Soros, Mohamed El Erian and Warren Buffett is amazing – yet being surrounded by millionaire, nay billionaire, guests can make you feel a bit miniscule in the big picture.

That said, at least we don’t have to run the kind of risk those guys do. I can sit down for my dinner at home not having to check my Crackberry every three minutes worrying if Ben Bernanke or someone has let slip something that has sent the Dow Jones down three hundred points or whether Spain has admitted that it has marked down its bank property loans by 50 per cent (leaving them only 25 per cent overvalued, I hear you say). There’s a lot to be said for going home with no position on.

So my stress levels are reduced, but so is my potential upside. And that’s how it should be. If you play the markets well you deserve to clean up in the remuneration stakes.

CNBC presenters, quite rightly, are not allowed to play the market via individual stocks or derivatives. In fact, there are so many things we can’t trade I rarely bother to look for the stuff I can. That’s fine, but I now live my market trading ideas via virtual trades, which funnily enough are much easier to make money in due to the fact that you can always double up on the trade when it goes wrong without fear of consequence or margin call. Trust me it always works – eventually.

The other way I play the markets is by taking a look at my pension fund. Unfortunately I now have an online portal to my pension, which updates daily. Talk about “a watched pot never boils”. But my portfolio is so boring I think I’m going to go and buy a tin of emulsion and watch that dry on the walls instead. It’s mirroring the broader equity market beautifully. So beautifully, in fact, that I do wonder why the manager gets paid.

Of course, I have a home bias so it’s mostly full of UK equity with some Europe, US and Japan thrown in for good measure. I’m not going to name the top 10 holdings but I bet you could name most of them without breaking sweat – a couple of oil majors, a pair of miners, one pharma, one bank, some tobacco and a telco or two. Yawn.

So am I lazy not spending hours poring over the potential investments I am allowed to allocate my money, pension and otherwise, to?

Absolutely I am, but given that we are all so exposed to this multi-year crisis via our jobs, our mortgages, our tax bills, our utility costs and so on, I, like a lot of people, want a bit of boredom in some part of my life.

And the markets are just the same. After more than four years of the debt crisis and over a decade of equities failing to reach previous highs, people like me just want a bit of stability somewhere in their lives – boring is good for the soul or at least your sanity.

Steve Sedgwick is an anchor for Squawkbox Europe on CNBC