The UK’s best hedge: Air-con

𝗧𝗵𝗲 𝗨𝗞 𝗶𝘀 𝗺𝗶𝘀𝘀𝗶𝗻𝗴 𝗼𝘂𝘁 𝗼𝗻 𝗶𝘁𝘀 𝗯𝗲𝘀𝘁 𝗵𝗲𝗱𝗴𝗲.

Hedging is often seen as preventing the worst-case scenario. It might cap your upside but it protects you from catastrophic impacts when markets move against you.

When planning our recent trip to London, I made one of the best investments of my career. It wasn't a stock, or sorting out my USD/GBP exposure before I left, it was a simple piece of equipment.

Growing up in the UK, it was common to hear the phrase "just put a fan on" during a heatwave. For those of you not accustomed with this phrase, when the weather broke 25C (77 degrees), your parents would scramble to get fans out so that you could circulate that warm air around the room. It didn't improve the sweaty conditions but it was just about better than doing nothing.

Having lived in the US for the last 15 years, air conditioning is now an integral part of my life. There is no better feeling than coming back indoors when it's blisteringly hot outside, to be hit with that wave of cool air immediately as you enter the house.

But it's not just a point of comfort. Air con actually has a huge impact on productivity. A Fortune article last week highlighted this point. Over 90% of households in the US have AC, in Europe that's just 20%, and in the UK just 5%. But the old adage of "It doesn't get hot enough to justify AC here" is no longer true. Summers are getting warmer year on year. In Europe heat waves often shut down schools, disrupt businesses and make it impossible for people to function at their best.

Sleeping in hot and humid rooms has a direct negative impact on sleep quality. Bad sleep leads to higher rates of errors, lower reaction times, increased irritability and higher stress.

I remember getting the Northern line to work in London in the Summer. By the time I got to my desk I was usually drenched in sweat and in a bad mood. I wouldn't call those first minutes in the office anything other than a waste!

So, what was my incredible investment - a portable air conditioning unit. The temperature in my room before I switched it on, 28C (83 degrees)...afterwards, a crisp 20C (68 degrees). The result was a perfect night's sleep, ready to brave the crowds of London with a 3 & 6 year old.

Like hedging, AC comes with a small cost in higher electricity bills. But it prevents the worst-case scenario: sleepless nights, lost productivity, and bad decisions.