NEWS & MEDIA

Ashley Boolell – Shard Capital Commodities Report – January 2020

3 February 2020

Ashley Boolell, Commodities partner at Shard Capital, provides his insight on the latest commodity market developments following the release of the latest monthly report.

Download Ashley’s latest Commodity Report here.

Executive Summary: Commodity Report January 2020:

Cardinal Richelieu, the great French clergyman and statesman who served King Louis XIII, once said: “If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang them.” L’Eminence Rouge, as he was known, probably backed this statement more often than what is revealed in historical accounts.

Now imagine this: Richelieu reading key commodity price projections for the full year of 2020 to the French court. All the analysts, picked from various places around the kingdom, have sworn to the great man that their predictions are supremely honest and that Richelieu can safely take France to war since guaranteed wins on commodity trading will make King Louis XIII the richest monarch in the world. But Richelieu’s interest is not just about making money for the king; it is first and foremost about protecting the interests of France.

He summons each analyst and asks them to swear before God that their predictions can help him achieve the task that was entrusted to him. None of them provides a satisfactory answer. “Then messieurs,” replies Richelieu, “I have no other choice but to have you hanged.”

How could all of this apply to the financial markets at the start of the new decade? Well, Cardinal Richelieu looking after France would be the equivalent of a trader protecting his capital. Faith in price projections cannot replace a solid trading plan, discipline in risk management and the ability to keep emotions in check.

Our readers might wonder why we are reminding them of such basic tenets. This is because many market participants will keep trading stocks and commodities blindly this year. Most of them will look at price projections set in January 2020, throw money at them, sit back, and pray.

Richelieu would probably say: “Cogita ante salis” (Look before you leap”).