As the global recession takes hold, it is opportune that the theme of this edition of Blue Chip is investing.

Investment markets are like a temperature gauge for the state of the world, but they do tend to anticipate recoveries well in advance of this actually happening. So there is little that one can read into the recent positive market movements, both locally and internationally.

A recent report by Wealth Insights on a survey of financial advisers in Australia provides an interesting gauge of how financial planners and their clients are experiencing the recession. Their collective sentiments are best summed up by one financial adviser’s comment: “I now have a box of tissues sitting on my desk”.

The report doesn’t clarify if the tissues are for the adviser or the clients, but it certainly indicates that both groups are feeling enormous pressure.

While one adviser does make the comment, “I’ve had several clients in tears in my office”, the survey observes that, “While rarely blamed by their clients, many advisers nevertheless share their clients’ pain and feel bereft at not having provided their clients with advice that would have seen them in a stronger financial position than their current situation.”

When it comes to investing, hopefully this form of self-flagellation is due to the empathy advisers feel for their clients, rather than believing that they could have placed their clients in a better position. For the one truth we know about investing is that we cannot predict the future.

Given this truth, advisers should not be too hard on themselves if events happen in a way that we did not expect.

The best that advisers can do is develop an investment strategy that is designed to meet a client’s investment goals and implement that strategy according to sound investment principles.

This is easier said than done, because it is always when markets are at their extremes that investment principles are forgotten, as greed or fear take over, or when unexpected events such as 9/11 or the credit crisis happen. And the favourite comment you hear at times such as these is that “this time it’s different”.

Remember that term the “new economy” that justified the technology bubble of the later 1990s? Well, as things turned out, things weren’t so different.

So for advisers today, the real challenge is not to come up with a new investment strategy, but rather to coach clients and themselves through this tough time, remembering that it is not so different from other such times in history.

While the tissues may help manage the short-term emotions of clients, there is no doubt that robustly defined objectives and a soundly implemented investment strategy will provide clients with the necessary emotional armour to prevent them or their advisers from making short-term investment decisions that are detrimental to their long-term wealth. This is the greatest risk that all investors face.

Just as history teaches us that a time like this is not necessarily “different”, it also shows that markets tend to move with great speed upwards in anticipation of the end of a recession and those left on the sidelines will inevitably be playing catch-up in search of market returns, if that is what they need.

Speaking of sidelines, I have decided to move to the sidelines with respect to my involvement with Blue Chip. As you can see from this edition, I am no longer the consulting editor, a position that I have resigned because of increasingly greater demands in my professional life.

Nevertheless I plan to continue contributing articles to Blue Chip and wish the team and publication everything of the best going forward. Thank you for your readership over the past year and I trust that you will continue to find Blue Chip a valuable resource, whether as an adviser or client.

Rob Macdonald, retiring consulting editor of “Blue Chip” and head of Xchange Solutions – a division of Nedgroup Investments