PA OPINION: Logic not the answer in the cynical bull market

Added 26th August 2016

It is commonly accepted within investment markets that asset prices generally are expensive at the moment. Yet, despite this common knowledge, inflows continue unabated.

PA OPINION: Logic not the answer in the cynical bull market


Bank of America Merrill Lynch summed up this disjuncture well in its latest Thundering Word note, stating it remains “cynically bullish” on financial asset prices.

Explaining its stance further, it said: “Tactically, the 3P’s (Positioning, Policy, Profits) still argue for upside; but with risk assets up 15-20% since February, and September a big “policy month” we once again recommend buying volatility.

Pointing out it believes a “bond shock” remains the key autumn risk for markets, it added: “Excess monetary abundance has been the primary support for asset prices. Risk assets are now further underpinned by the new “Keynsian Put”, the expectation that fiscal measures will be deployed to combat any renewed weakness in the economy/markets.”

James Clunie, manager of the Jupiter Absolute Return Fund espouses a similar view. Confidence in central banks and the reach for yield within markets that has accompanied this confidence has been the key driver of the distortion of asset prices, he said.


"it is not sufficient to be an entirely logical manager, because fundamentals are not the only thing at work."

Such a philosophy is fine as long as everyone buys into it, but as Portfolio Adviser has pointed out before there is a growing sense that it cannot continue in perpetuity. So, where does this leave the cautious investor?

For Clunie the answer lies in a move slightly away from logic.

Kames Income Hub


Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

Matthews Asia Funds Asia Dividend
Matthews Asia Funds Asia Dividend...

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

Geoff Candy

Group digital editor

Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.



Investment Strategy




PA Channel Island 2016
PA Channel Island 2016

8th November 2016
The Royal Yacht, Jersey


17th November 2016
The Andaz

PA Emerging Markets 2016
PA Emerging Markets 2016

1st December 2016
The Mayfair, London

Sponsored Content

Investment Strategy