PA ANALYSIS: Ignore the seven-year itch, stick with the “unfashionable” bulls

Added 28th April 2016

Seven years of equity rises, have we really seen any evidence of complacency that ended previous bull markets?

PA ANALYSIS: Ignore the seven-year itch, stick with the “unfashionable” bulls

High-profile bears like Crispin Odey and George Soros continue to make headlines – and rightly so – with their warnings of global instability, but that doesn’t necessarily mean the majority are getting carried away.

This market cycle may well go down in history as the age of the “cautiously optimistic” a cliché which inherently means very little when those who have stuck with equities should have performed very well indeed.

“It is fashionable to be bearish, and no one is going to get sacked for saying ‘I think there are a lot of problems in the world, I’m going to be cautious’,” says Gary Potter, co-head of the F&C multi-manager team.  

“But actually, if interest rates do go up a little bit, you suddenly might get a transition back into equities – the herd like mentality of people buying defensive assets is going to flip and that could be one of the biggest single opportunities we’ve seen.”

He adds: “I can see an environment by the end of the year when we are talking about the possibility of some inflation, bond markets reacting, and equities doing well again. I could see this happening, for no other reason than mean reversion, and therefore you could get quite a buoyant period for markets against the doomsters that are out there who I think are unhelpful.”

"This market cycle may well go down in history as the age of the 'cautiously optimistic' a cliché which inherently means very little"

Potter warns to “never underestimate the US” and it is in the world’s largest market where Ronald Temple, Lazard’s head of US equities, believes sentiment remains too pessimistic.

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About Author

Gary Shepherd


Portfolio Adviser

Gary joined Last Word Media in 2009, becoming editor of Portfolio Adviser a year later. Previously, he worked at Incisive Media with roles across its Professional Adviser, Investment Week, Bloomberg Money and Mortgage Solutions titles. Gary has been shortlisted for various awards, winning Headline Money Investment Writer of the Year in 2010.



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