The investor confidence that is driving equity markets at the moment is attributed to rising expectations for a steady revival in the global economic environment, but Jeremy Batstone-Carr, director of private client research for investment strategy at Charles Stanley, warns that investors are pinning their faith on a fairly swift return to more normal operating and investing conditions.
“We cannot help but be amused by the fact that we grew up to the mantra of ‘buy low, sell high’.
“Here we are, within touching distance of new stockmarket highs (and beyond them in some cases such as small caps), yet only now are many investors looking to get involved (or rotate out of ultra-expensive sovereign bonds).”
He adds: “We view an equity pull-back not just as inevitable but as a healthy development and suspect that the stockmarket is now almost perfectly priced for a recovery that may yet not happen or if it does, may prove less than perfect.”
The overarching message from Investment Adviser’s Spring Investment Monitor is that investors should not get carried away.
Global stockmarkets may well be on the up, but now isn’t the time for investors to lose their heads. As Mr Batstone-Carr points out, the age-old mantra is to buy low and sell high. Investors would do well to remember this.
Jenny Lowe is features editor at Investment Adviser
