Well, I laughed. The serious point is if you listen to the doom mongers – and there are many – the only real options for investors wanting to manage their way through this latest pecuniary pickle are cash, gold, or for those yet to write off risk assets, emerging markets.
The pessimists are never disappointed, but it is those risking ridicule and putting their heads above the parapet with a positive outlook that could yet have the last laugh.
The politicians’ view
“I come to you with words of resolve, determination, confidence and belief. Belief that the British people will overcome this challenge as we have overcome so many before,” proclaimed the chancellor at the recent Conservative shindig in a speech which was never going to win over the snipers.
“We have a deficit plan that commands the confidence of world markets and has brought stability at home,” he said. But, it’s the smarmy politicians that got us in to this mess, and it’s too late now for the poise and proclamations of confidence, right? Well, maybe they have a point.
From the other side of the fence, I heard a similar rallying call from a speech this week by former Labour MP and EU Trade Commissioner Lord Mandelson.
“I think there is a problem in the West, in Europe and the US, with a sense in which looking as we do at the way the world is changing, how economic power is shifting and how living standards are rising and incomes are rising so much more rapidly in the emerging economies than in the advanced economies, we are perhaps talking ourselves down too much into a state and sense of depression about our future which is not warranted,” he said.
“We still after all have those same characteristics and conditions in our societies, our economies and our countries that made us advanced economies and markets in the first place. We in the West are organised with a relationship between the state, governments, markets and the private sector, that is broadly speaking better than anywhere else in the world.”
Taking risks
In terms of markets, the positive effects of self-confidence will, of course, only become truly evident once investors start to take risks again.
“If we can avert a really nasty recession, just stumble along, life could be quite interesting as there are lot of interesting companies, and a lot of yield out there, and if you are just stuck in Treasuries and gilts and cash, all you are really going to do is get a negative real return,” says Mark Harris, manager of Eden Financial’s Global Multi-Strategy Fund.
“These are markets where you have to be a bit more active, more rotational, but keep some core of defensive value. But the next three to six months could be quite interesting to say the least.
“There is a lot of doom and gloom and there are genuine reasons to be cautious with a lot of hurdles, but for those that can be brave at the margins there are some big returns to be had and we are not a mile away from those starting to come to the fore.”
Keep positive, and the light at the end of the tunnel might be closer than you think!
