Global markets lost 4 per cent in the first month of the year, spooked by poor manufacturing data from the US and China, and nervousness in emerging markets as the Federal Reserve began to tighten money supply.
China's official manufacturing PMI (Purchasing Managers' Index) for January dropped to a six-month low of 53.4 from 54.6 in December, its lowest reading in two years; that was a particularly noteworthy shock, as this was official data.
Sentiment in the US meanwhile was soured by payroll figures that rose only 113,000 in January - well short of the 180,000 advance expected; although distorted by the cold weather, it still indicated the US economy is adding fewer jobs than hoped.
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If the US Federal Reserve sees these figures as more evidence of economic recovery, the tapering process will continue, and there could be further crises of confidence in minor currencies. If not, weaker currencies may get a temporary respite and the Fed will be forced to keep its foot on the gas, but a change of policy is now unlikely.
The recent sell-off has also changed the relationship between precious metals and other markets. Unusually, both gold and the dollar have been strong at the same time, boosted by safe-haven demand as currencies and other assets tumbled in emerging markets.
Gold prices have risen around 5 per cent since the beginning of the year, but part of that reflects a forlorn hope that the Fed will reconsider the taper. Silver has outperformed gold recently, despite reports that market makers have been trying to manipulate the price lower because they are net short and there is a lack of genuine selling.
In spite of the uncertainty, US equity markets still have a lot to commend them. Last year the Dow pulled off an astonishing 32 per cent rise in the face of strong drags from higher personal tax rates and the government's austerity measures. US corporate earnings growth remains strong and is predicted to beat even last year's bumper 7 per cent. By the end of January, 250 US companies had reported and most had surprised on the upside.
In uncertain times, there is a lot to be said for staying loyal to markets where companies are still managing to make money in the real world of commerce, rather than titular financial instruments such as precious metals.
In the UK, the economy is expected to grow by 2.5 per cent this year and 2.1 per cent in 2015, according to the latest forecast from the National Institute of Social and Economic Research, which is broadly in line with other forecasters such as the UK's Office for Budget Responsibility. However, disappointing updates from companies such as Shell, Pearson, BP, RSA and AstraZeneca show there will be significant road bumps along the way. Productivity has been much slower to pick up than after past recessions, causing the Bank of England to abandon its flagship policy of linking interest rates to unemployment, as the jobless rate fell rapidly towards its 7 per cent target.
Markets have however been taking comfort from Bank of England governor Mark Carney's insistence that rate rises should be delayed as long as possible. It is something he has re-iterated at every single public appearance.
The problem with running a portfolio that gets valued for a magazine audience every month is that there is only one occasion per month that changes can be made, and the date is not even of one's own choosing. This time is no different. The portfolio was valued two days after the 3 February rout of many markets, both developed and emerging - the worst day of losses since June 2013.
Still, we took profits from our private equity holding Northern Investors Company, shares of which rose on the news that it will increase the return to shareholders to £14.1 million (after last month saying it would pay out £12 million). The dividend will be paid in July. We sold all 800 shares, realising just over £3,000.
The cash was used to boost our exposure to US large caps, with an additional 110 shares in the iShares S&P 500 ETF. There is a big valuation differential between US large caps and small and mid-cap stocks, which were up nearly 40 per cent last year and now trade above their historical price/earnings ratio norm. Large-cap earnings forecasts are reasonable at multiples of about 17 on this year's earnings while US small caps are trading on an average p/e of 23. Bull runs don't typically end when multiples are still in the mid-teens.