The current rise in markets has weathered the storms of Brexit, Trump and the “debacle” of the UK general election, JH&P partner Rosie Bullard said, with little threatening to stop the upwards trend.
Bullard said: “The saying that bull markets climb a wall of worry is as true of this as any. We’ve had austerity, Brexit, Trump, elections in Europe and the debacle of the recent UK general election, but markets are still holding their nerve.
“People have been calling the end to this bull market since Brexit, but living in fear of an imminent bear market can be bad for your health and wealth.”
An investor who pulled out of the FTSE 100 post-Brexit would have lost out on 24% returns, Bullard added.
The current bull market, defined as a continued upwards trend that only ends with a 20% drop over at least two months, started in March 2009 in both the UK and the US and is now into its eighth year and average double-digit returns.
The temporary 20% drop in markets in January 2016 has been written off as a correction as markets recovered quickly.
Bullard added: “Bull markets tend to last much longer than bear markets and can be very rewarding, if you can cope with the anxiety.
“The problem is that bear markets can be very painful and this sears in the memory of investors who, behavioural economists tell us, fear losses more than they enjoy gains.”
Monetary policy and supportive economic data should improve the support out there for stocks, investment manager James Horniman said.
He added: “Quantitative easing has pushed bonds into bubble territory and squeezed yields to levels that are unsustainable. That is driving investors into equities and further supporting equity markets.
“We do see pockets of irrational exuberance and the market failure to react to the general election result makes us concerned that they are becoming desensitised to political shocks, but we think this bull market has longer to run.”
