DIY Investor Magazine
/
Jan 2017
10
Angus Campbell,
Stature PR makes the
case for the defensive
HOW CAN INVESTORS PREPARE FOR AN EVER
INCREASINGLY UNPREDICTABLE LANDSCAPE IN 2017?
If anyone says they saw all that happened in 2016
coming they are fibbing!
There’s the wonderful stat that one of the big
bookmakers released after Donald Trump’s election
victory which was had a punter put £5 on the outcomes
of Leicester winning the premiership last year, Brexit and
Trump they would have won £12,500,000; a tidy sum
but way beyond the big win for the person who put £10
on Leicester at 5000-1 before the start of the 2015/16
soccer season.
For anyone to have gone on to back Brexit and Trump
at the bookies would have been a person with psychic
powers beyond all comprehension. Given what’s
happened so far this year you could argue that 2016 is
an outlier, but wait for next year, especially when you
consider what’s on the political agenda.
Despite all the uncertainty that has been dished out,
financial markets have taken things in their stride.
Especially in the US, few would have guessed that
the Dow would be nudging 20,000 in the aftermath of
a Trump victory. Investors that are long equities have
generally had a good 2016 or in the worst case not
necessarily suffered any great losses.
Certainly, given the fallout from the Brexit vote when a
number of people in the fund management space were
nursing heavy losses on behalf of their clients, today
many of their wounds have healed.
However, whilst the equity bull market has continued, a
few alarm bells are ringing in the bond market with the
US’s Federal Reserve looking to continue its tightening
cycle and even the odd murmuring from the Bank of
England that rates may have to go up in 2017 to address
rising inflation.
We have heard stories of the top of the bond market
rally for years now, but a continuation of the sell off has
the potential to impact equity markets in 2017 as any
investor anxiety over debt is likely to filter through to
other markets.
So onto next year. Politics will continue to play its part
with the French and German elections being ones to
watch. The growing electoral unrest is unlikely to have
subsided by the time it comes to these elections.
If 2016 has taught us anything it is to ignore voting polls
and even though French Presidential favourite Francois
Fillon is well ahead in the polls for next year’s vote,
France is the next key battleground for the protest vote
and Le Pen is a clear threat.
Of course we mustn’t underestimate the triggering of
Article 50 which itself carries many uncertainties as
there is currently no clear path to Brexit.
It will not come as any surprise to anyone that I voted
to remain and happy to be called a Bremainer, but the
reality is that what’s done is done, so on this issue we
need clarity and the sooner we get it the better, from
both a business and investor perspective.
YOU COULD ARGUE THAT 2016 IS AN OUTLIER, BUT
WAIT FOR NEXT YEAR, ESPECIALLY WHEN YOU
CONSIDER WHAT’S ON THE POLITICAL AGENDA
A FEW ALARM BELLS ARE RINGING IN THE BOND
MARKET
