There’s an old stock market adage: Sell in May and go away… and I’ve watched performance over the years as the reporting seasons close and the fund managers pause for thought during the summer. It can be in many fund managers interests to see the indices go into the doldrums so they can pick up bargains that surge ahead…
This year, I predict, will be a time when many fund managers catch up on cinema they’ve missed over the past years. They will be sitting on their cash pile and doing alot of thinking. There’s no rush to inject cash into investments that are going to tread water through the summer season at best – or, given the loss of momentum, actually sink further until a final quarter burst starts in September as there’s a run to close the year’s position with a flurry.
I felt I was witnessing another pause in activity around Easter? Normally, Easter is a disruption in the year’s ramp-up, but this year everybody took a fortnight’s holiday around the bank holidays and are only just lumbering back into action for month end.
For my normal blog optimism, see Luke Johnson’s FT column today – his gist: stop fretting and start a business. JFDI.
“I predict that many great companies will be started in the next year or two, by those brave enough to believe in the futre, energetic enough to seize the day and optimistic enough to deny the possibility of defeat.”
For my Twitter gloom (well, I thought I’d try to keep both mediums interesting by taking divergent views), read Martin Wolf’s FT column today.
“…we are living through a globally synchronised recession that coincides with a huge financial crisis that emanates from the core countries of the world economy, particularly the US. This is a recipe for a long recession and a weak recovery. Whatever is done about the financial system, “deleveraging” is the order of the day (see chart). The UK’s position in this looks dire. But that of the US looks quite bad, too, even compared with that of Japan in the 1990s.
For better or worse, the authorities have decided to bail out their financial systems with taxpayer money. Almost all the affected countries should be able to afford to do this, at least on the IMF’s numbers. So now, having made the fundamental decision to prevent bankruptcy, they must return their financial systems to health as swiftly as they possibly can.
Even so, that will prove to be a necessary, not a sufficient, condition for a return to robust economic health. The overhang of debt makes deleveraging inevitable. But it has hardly begun. Those who hope for a swift return to what they thought normal two years ago are deluded.”
Both these views are valid. The macro economic picture is a total mess with the IMF predicting that someone needs to magic up $25,600billion to fix the fantasy finances we developed to 2008. But this means that, on an individual basis, there are huge opportunities appearing for businesses to service the new world order as it emerges.