The Markets Bull performance and Bear trepidation
Listening and watching the various expert commentaries on the performance of the current market can leave any investor perplexed. The S & P 500 is performing at a high of 8% to 9.8% and the Dow Jones has come close to historical highs over the last year. Yet, I have attended fund managers seminars over the last two years that impressed on all attendees that there was serious disruptive elements and factors in the market place. At one particular event in 2016 entitled “Disruption” each fund manager declared that cash plus 4%/5% was their target. Yet, the average managed fund with an equity exposure of up to 65% has produced on average 6%/8% over this timeframe. 2016 saw the entrance of Mr Donald Trump – now President Trump, Brexit has become a reality and Europe has Italian, Spanish and Turkish delights on its menu. And don’t forget the trade war issues.
To counter these worries there is some good economic factors at play. GPD in the States continues to grow. Trumps tax and infrastructure budget components appease the market and the re defining of some of the trade agreements (America, Canada, Mexico) seem to be making progress whether you agree or understand the negotiation methods in place. At home, there are some worries that we are “going back to the feature” with rents at all-time highs, employment at go steady levels, and house prices have been increasing steadily.
In the context of these conflicting scenarios, what should the individual investor do. In our view a number of issues need to be considered:
1. The timeframe of your investment 3/5 years or a 20-year retirement plan investment.
2. Your own attitude to risk and volatility. Is it correctly aligned.
3. Your present access issues.
4. The spread of your total investment portfolio.
5. Consider a balance and diverse approach.
In summary, yes if you have been defensive with your investment over the last two years you would have underperformed in your potential returns. However, this may have been aligned to your risk profile and provided you with peace of mind. Historical data shows the that market returns to where it was after 18/24 months. And as one famous investor once said, “it’s not about timing but all about time”. An index to which some investors take more heed than most is production managers/manufactures indices. Interestingly, the German index aligned to this sector has declined in recent weeks, for the first time after an extended period of positive returns. EU/ U.S. trade war effects???