By Jonathan Sloan

THE year 2022, by any measure, has not been a typical one. In fact, that statement could be said of the last number of years.

As we turned the corner into 2022, slowly emerging from the challenges of the pandemic, the popular mood was once more of optimism.

Vaccine roll-outs, returns to offices and schools, and the prospect of travel were again on the cards for many.

But few, if any, could have foreseen the truly devastating events of the Russian-Ukraine conflict and that, for the first time in a living generation, we would again see war in Europe.

Whilst it is impossible to predict, and nobody truly knows with certainty what the future holds, what we can do is reflect on what may be potential outcomes, which is a lot less Mystic Meg than it first sounds.

What we do know is we are facing into a high inflationary future, but the question remains as to how high it will go – and for how long.

We also know interest rates are rising, but we cannot with certainty determine how far central banks will go in their perpetual dance of interest rates and inflation control.

We know the labour market is “tight”, with multiple industries and firms finding the availability of staff a challenge.

However, we have little knowledge at this stage of whether this will result in demand led inflationary wage pressure.

And whilst we stay cognisant of the Ukraine war, it remains unclear as to how pronounced an impact this will have on global food production or security.

Accordingly, the real job of the professional investment manager is to imagine a range of potential futures and advise on the most appropriate combination of investments – both benefiting from and protecting against these potential outcomes.

It can be said that a good investment adviser is comfortable with the fact you shouldn’t allocate your capital by looking in the rear-view mirror – although it can be a helpful place to start.

Over the longer term, it comes back to the assumption the potential for human ingenuity and innovation will be more successful “tomorrow” than it is “today”. This is often a good base from which to build.

However, as the first half of 2022 has so richly shown, in times of volatility, diversification of asset classes – whether stocks, bonds, or cash equivalents – really does do what it says on the tin in helping to spread out your exposure and offset any potential bumps in the road.

So, for those who are trying to invest with a certain outcome in mind, it may be prudent to err on the side of caution and with a certain sense of investment humility.

Staying mindful that, whilst there is potential for a positive outcome, there can on occasion be another side to that coin.

It goes back to the drum that we always beat – try not to obsessively over-manage your portfolio, stay diversified, and invest for the long-term.

Jonathan Sloan is regional director for Barclays Wealth Management and Investments in Scotland.