LGT Wealth is one of our trusted investment partners who provides us with some forthright views on the investment markets. Yesterday we heard from Sanjay, the Chief Investment Officer.
Two of our investment team, Emma and Jo, had an audience with Sanjay, and as always, found his delivery to be most engaging and profound. He reiterated the areas of positivity and commented on how the cycle is coming to an end. He warned how easy it is for investors to ‘bail out’ of the markets due to investor fatigue. History tells us that this is normally when the markets offer good value. The perspective is made more difficult because of the allure of higher interest rates on offer from deposit accounts.
Traditionally, the dilemma has been whether to invest in property or the investment markets, but with the cost of borrowing being high, less tax benefits, weaker cashflows and falling property prices, a large proportion of landlords are offloading their properties.
In this week’s Commentary the agenda is as follows:
- Investor fatigue
- Cash being used strategically
- Is now the time to switch into cash deposits?
- Even the Bank of England believes we’re nearly there!
- Mortgage rates set to fall again
- Oil prices are not helping the inflationary cause
- Evidence that the medicine is working!
- Interpreting the news
- Summary
Investor fatigue
There is undoubtedly a feeling of fatigue among investors after 20 months of falling prices and volatility, false hope and negative news flow. Market prices started to unravel at the start of 2022 and sentiment has remained jaded right through to where we are now. In fact, 2022 was one of the worst years in 50 years when one considers the combined performance of equities and bonds.
As 2023 has unfolded, the beacon of light amongst the gloom has been technology stocks, stimulated in part by the rise to prominence of artificial intelligence. This momentum has spread to the wider markets but there is still the ‘push me, pull you’ of inflation, interest rates, weak economic forecasts and concerns over company earnings, etc., which has led many potential investors to stay on the sidelines. Understandable with offers of over 5% returns on fixed-term deposits.
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Risk warning
Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.
