“The Bank of England was formed in 1694. Prior to March 2009, the interest rate had never been below 2%. Now, interest rates have never been so low and they have just been cut and might fall further before Christmas. That is truly unique. I do not believe in having grades of uniqueness. You are either unique or you’re not. This is a unique time.”
During this fantastical period for global markets, Gibson admits Mattioli Woods is “probably just on the cautious side”. The team has fewer equities across most of its portfolios than it has had historically, and cash and gold levels are also higher than they have been.
And though Gibson says the firm has done very well in recent years in mid- and small-cap stocks, particularly in the UK, the situation remains complex on the back of Brexit.
“We reduced our UK and European holdings before the referendum, not because we thought the vote would be as it was, but we felt the downside risk was looking greater than the upside risk,” he says.
Political jigsaw
“The UK will leave the EU. I don’t think there is any way out of this. If there is going to be a recession in the UK, which I think there might be, then, clearly, we know stocks tend to foresee these things so there could be better buying opportunities in the next few months than there are today.”
After Donald Trump’s victory in the US presidential race, Gibson was likewise thankful for his cautious views on the American market.
“There are still plenty of unknowns about how Trump’s policies will play out, which suggests America might not be the best place to be overweight right now.
“On election day, we witnessed the triple trumping of the Republican party. They have more power than most expected them to have in their hands even 24 hours before the vote. In the short term, we have no plans to change our US weighting.”
He adds: “Trump is clearly tapping into this non-establishment feeling that in reality is more of a global phenomenon than simply limited to the US or UK. I do think that is something we need to be very conscious of, just like GDP. We won’t make our investment decisions based on politics alone, but it’s part of the jigsaw.”
As the team’s portfolios are multi-asset and global, they are prepared to go wherever the opportunities are. For Mattioli Woods, Japan is still rife with companies that are worth backing, which is why it has maintained a neutral, and in some cases positive, weighting to the region. In fact, in many of its portfolios, the wealth manager has a higher weighting in Japan than in the US, says Gibson.
