Trevor Greetham warned of potential volatility ahead of Wednesday night’s big drop on Wall Street in RLAM’s latest ‘Investment Clock’1 report. Lower share prices will create buying opportunities, in his view. Trevor says:
“The old adage ‘Sell in May and go away’ has some value. Since 1973, stocks have posted an astonishing 97% of their returns from October to April. October itself can be the most volatile month, however, and recent market moves fit this pattern.
“It’s not surprising to see a sharp rise in volatility given the negative cross currents for markets. Global growth is slowing, US interest rates are rising and Trump’s trade war rhetoric is hotting up ahead of next month’s midterm elections. Longer term, we expect the economic expansion to continue into 2019 and this should ultimately propel stock markets higher. Investors should note that US tax cuts and spending increases are still feeding through, interest rates elsewhere in the world are very low and China is easing policy to offset trade war fears.
“Our multi asset funds have been defensively positioned since the early summer but we have started to buy equities on weakness after our investor sentiment gauge hit its most pessimistic reading since April3. As another old saying goes, investors should be fearful when others are greedy and greedy when others are fearful.”
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About Royal London Asset Management (RLAM):
Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.
RLAM manages £117 billion of assets and employs 89 investment professionals. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.
For professional clients only, not suitable for retail investors.
Issued September 2018 by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.