This year, you’ll be safer if you swim between the flags
Only time will tell if a bull or bear market awaits investors in 2018. There’s plenty of ammunition for both scenarios. But I think it will pay investors to look closely at the boundaries marked by the bull and bear cases, and treat them like the flags between which they must swim.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Peter Bear
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Great article on both points of view.
Very disappointed with the conclusion. It’s not clear. Has contradictions as you read it. Leaves me confused.
Clarification would be greatly appreciated.
Kyle McGeechan
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I’m glad that both scenarios were given in the article and there is good arguments for both cases.
Another case for the bear market is the case that Benjamin Graham spoke of. That’s a large number of IPO’s offered to the market that are generally of poor quality. This has been repeated time and again through every boom, preceding the bust.
In 2017 almost 1700 companies floated, up 44% on 2016. The most since 2007, according to dealogic. This was published in the financial times on December 27 in the Hong Kong edition. Worth a read.
As you said in the intro Roger only time will tell and its impossible to time the markets, however I think people are very very quick to forget and to quote one of the greats “every bull market will end”.
The article from ft
https://www.ft.com/content/ae9e6500-e69b-11e7-8b99-0191e45377ec
Chris
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Subscriber access only to the article…sorry !
Max Zan
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Hi Roger
What do you think will happen to Asset prices and interest rates when Central Banks eventually bring QE measures to an end?
If inflation remains low , then you would think there is no need for interest rates to rise, but the big unknown is what affect the ending of QE will have.
It’s possible to see rates rise even though inflation remains low.
2018 is going to be an interesting year. My view is that rates will rise gradually and we will see markets plod along but with added volatility.It’s best to avoid anything that’s highly geared or vulnerable to higher rates – eg Bonds,REITS, Infrastructure Stocks, Discretionary Stocks, Bond Proxies etc
Chris
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Which also means “don’t go dabbling in things and areas you don’t understand and are too volatile” (like cryptorubbish)….at the risk (sic) of using Buffett’s quote about the tide going out…