And, having spoken to a number of wealth managers in the past few weeks, I can’t shake the feeling that the moves seen so far in the second quarter have something in common with those of such a prone boxer.
The volatility seen in January and February caught a lot of investors off guard – especially the sharp rotation back into value stocks. As a result, a lot of managers have taken risk off the table, increasing cash weightings and moving back into other safe havens.
But, while the volatility has diminished somewhat since March, the defensive stance has remained, as has the lack of enthusiasm for the recovery in that part of the market. As one wealth manager said recently: “It is hard to get enthusiastic about a recovery that you haven’t participated in.”
All of which is completely understandable, especially given the amount of noise now in the system from the likes of Brexit and the US election.
Indeed, Hargreaves Lansdown said in a trading update on Thursday that 25% of investors cited current uncertainty over EU membership as the reason behind their reducing their propensity to invest.
"There is a fine line between being gun shy and waiting patiently for a tactical opportunity."
But, within this general malaise, lurks the danger of inertia
My colleague Alex Sebastian has already pointed out the possible contrarian opportunity being presented by this stance with regards to UK equities. But, a broader point is worth making. There is a fine line between being gun shy and waiting patiently for a tactical opportunity – especially in a world of low growth and already inflated asset prices.