Market SenseThoughts on manager selection and macro-economic eventsSkip to contentHomeAboutBackgroundDisclaimer← Older postsCapital ControlsPosted on March 18, 2013 by Peter Fitzgerald CFAWhen you place your money in a bank you should not have to worry about the possibility of losing some or all of your capital.  We may complain about the economy in the UK but spare a moment and consider the plight of Cypriots who are threatened with the confiscation of a proportion of their savings, simply for placing them in a bank account in their own country.I have been more optimistic than most about the outlook for Europe and have benefitted from a strong equity market rally.  Draghi’s ‘I will do what it takes to save the Euro’ speech reinforced my view.  However I have always cited policy error as one of the key risks to recovery both in Europe and elsewhere.  I must recognise that I am now forced to question my own optimism.  When the facts change, one must reassess one’s view.I believe that the terms of the proposed bailout of Cyprus are a serious policy error.  It is too late to avoid the inevitable turmoil even if this plan is revised.  The precedent has been set.  We now have capital controls within the EU and confirmation that it is perfectly acceptable to take money from someone’s account with no warning.  All those who moved their money from banks in peripheral Europe to accounts in the core will feel vindicated.  And who can blame them?The question is where to now.  The markets will give their verdict but real damage has now been done.Posted in Monthly Article|Tagged Capital controls, Euro|Comments OffLook forwards not backwardsPosted on January 22, 2013 by Peter Fitzgerald CFAAs I look back on the last 12 months, I am broadly pleased with the investment decisions I made but I can’t help feeling that I should have done better.  I correctly anticipated most of the bigger market moves but one could argue that I did not put enough capital behind them.  While it is easier to be critical with the benefit of hindsight, it is important to learn how we could do better.Our UK managers did very well driven by overweights to midcaps.  US manager selection was also good overall but manager selection in Europe disappointed.  We were, however, more than able to compensate for this by adopting an overweight position in Europe via the Eurostoxx future in the summer before Draghi’s speech.  At the time we struggled to find active managers willing to take an overweight position in financials and some of the larger Euro zone companies.  I was worried that all our managers had such a large underweight to one area.  To balance our portfolio we added the Eurostoxx 50 future to our portfolio.  We still retain this position today, albeit at a slightly lower weighting.  In January 2012 we sold our full position in UK gilts as yields hit 2%.  This was a little early as they subsequently fell below 1.5% but it is rarely possible to exit at the top or buy at the b