Seeing the closing in financials in the US, I guess that many people have been closing their shorts but should we call that a bottom and get ready to ride a rally? I for one remain cautious, I still think there is a bump or two ahead. Yes, I believe the banks will lead the way but is ‘all’ the bad news out yet? Not only that but I think the market is turning on a sixpence. We’ve seen 5% rises and falls within weeks on every stock market in the world. No one anywhere has any idea whether this is a brief respite from a bear market or the start of a bull market.
Clearly the banking sector needs to be sorted out before UK plc can stage any sort of recovery. With money from QE it looks like that might just be starting to happen. I’ve no idea what the “official” next problem sector in trouble is going to be…manufacturing, cars, insurance…they all look dire at the moment.
One further point, the government is meddling with the markets, changes to accounting practices, changes to VAT, injecting money etc…It only takes a single announcement from some minister, or leak from a civil servant for volatility in a sector. Unlike an RNS, when you have an idea why a sector is moving the way it is, this meddling is causing sudden lurches and you don’t want to be on the wrong side of them.
The other day I heard that Anthony Bolton, one of the UK’s best known investment fund managers had called the market bottom, as he did a few months before and a few months before that. A very expensive mistake to make. In fact sometimes the people who are always wrong are just as valuable to have around as the people who are invariably right.
Years ago a news film editor I knew developed an astonishingly consistent talent – for being wrong. Whenever there was a tricky borderline editorial decision to be made in the cutting room, producers only had to ask him what his advice was and knew straight away they should do the opposite.
Today the Telegraph poses the question “Is this a Recovery or a Sucker’s Rally?” and gets comments from assorted contributors. So the question for us readers is not who’s got it right – but who’s got it wrong?
The choice is between UK fund manager Anthony Bolton (a new bull market has started), Edward Bonham (it’s got further to fall), Tim Steer (we’re just about there), Gary White (it’s a bear market rally) and Paul Kavanagh of Killick and Co (we could go above 4000 but we haven’t bottomed out yet – it’ll be another year yet etc etc).
…Remember it’s the guy with the track record of making CONSISTENTLY wrong calls who’s the one whose advice should be heeded …and reversed 🙂
Bonham-Carter chief executive of Jupiter Asset Management – his under-valued assets fund has fallen 11% over 5 years and 37% over the last year. I can forgive the last year but had his fund risen sufficiently well over the first four it would be positive and not negative! Wrong factor: high
I have never heard of Gary White.
Fund manager Tim Steer has fared better than BC over 5 years -4.5% but has done worse over 1 year -43%. Wrong factor: high
Bolton called the bottom in October. He is no longer a fund manager but is a contrarian. I believe it is a contrarian call to say this is a new rally. Wrong factor: good but not recently.
Paul Killick has nothing to say that I would ever listen to. Wrong factor: so high, off the scale.
The question posed is who has got it wrong most often. On my most basic of analysis, and without knowing who Gary White is I would say it was a toss up between Paul Killick and Tim Steer.
Steer says we’re about there and Killick says it might go up but it might go down.
So where does that leave us! LOL.
I see no point in debating when the bottom is in. It takes about six months after the bottom for the market to realistically confirm the bottom has been left behind. In that time the market will have risen by about 25-30% from the bottom and only the contrarians will have caught it. But they will presumably have caught a loss on previous occasions and if it turns out to be a false rally they could be wrong again.
You can buy on oversold or wait for a higher high and higher low breakout. You can select a pair of moving averages or follow a technical indicator. No one strategy is right or wrong. They just suit different individuals emotions and risk profiles. When one of us sells another of us buys. When one of us is taking a small profit another of us is jumping in on what we hope is the early stage of a trend. The easiest way to lose money is to not have a clear disciplined strategy – when to buy, when to sell and how much to risk.
The only thing that I can do is to make sure that I don’t draw a white line and say that the market has bottomed because, unlike UK fund manager Anthony Bolton, I’m using my own money and I don’t like losing it!