Volatile Times

It hasn't been a very pleasant couple of weeks in the City. Too much uncertainty, too much worry about credit and interest rates and where the next slap of volatility is going to come from. What this means for the private banker is endless telephone conversations with nervous clients who want to know if now is the time to be buying gold (no!), or getting out of dollar-denominated funds entirely (possibly), and by the way what is going on with Northern Rock?

We factor in a certain amount of stroking time to this job, but the past fortnight has allowed me little chance to do anything else. It's hard enough keeping up oneself with what is going on in China, or the US credit market, without having to relate it to others the next minute in a smoothly-glossed patina of reassuring professional expertise.

The trouble is, of course, none of us really know what's going on. Perhaps a couple of geniuses out there know whether the FT-SE 100 is settling into a gentle downward slide that will continue for the rest of the year, or can predict which will be the next bank to announce a £1.3 billion write-off. But most of us are just blindly stumbling from day to day trying to do the best we can with the deeply questionable information we receive.

Brighter clients have always known this; they accept it and stick with us for want of any better alternative. The danger in times like these is that the less bright clients will start to wise up to our fumbling, and in panic withdraw their portfolios and bury their heads in nice safe gold.

There's an interesting thing you learn about private banking after you've been doing it for a while. Really, it doesn't matter all that much how good your investment performance is, so long as you can persuade your client that it is better than the general market. This can be done even in contradiction of the hardest of facts. It is the skill that defines the good "farmer". It combines good expectation management with a certain amount of technically-impressive bullshit.

I suspect I shall be getting a lot of practice over the coming weeks.