becket bear markets more common in future

Investors might have to get used to more frequent bear markets and shorter, sharper downturns, leading to muted returns in future years, according to Thomas Becket, manager of PSigma’s Dynamic Multi-Asset Fund.

becket bear markets more common in future


More liquidity in financial markets and a change in the way people invest have also made the likelihood of future recessions greater, Becket added.

He said too much liquidity was sloshing through the system and people had become more impatient investors, flitting between positive and negative sentiment towards the market.

This trend has certainly been witnessed recently, with the FTSE 100 oscillating between the 4900-5600 range during the month of September alone.

The most pressing danger of greater liquidity and increased volatility, from Becket’s point of view, is the potential that retail investors may be turned off the industry completely.

So, despite investors getting no return on cash and negligible gains on government bonds, the perception that they are safe havens could be enough to maintain their popularity.

A large part of the blame for this scenario, Becket argued, could be laid at the feet of central banks and governments, whose policies since 2008 have "concertinaed investors" into riskier assets just to get a return.

The move into these assets has in turn affected volatility and will eventually scare people off investing all together because they do not fully comprehend the risk.

For this reason, he concluded, it is important to manage clients’ expectations in the years to come and make sure they are prepared for muted returns in comparison to those achieved in the 80s and 90s. 




Latest Stories