Lowes Magazine Issue 125

COMMENT

Contrary to popular opinion

As, in time, the cost-of-living crisis eases and global growth picks up, stock markets will already have started to recover – and that could be at pace. Those invested in the market when things seem bleak, will be best positioned to benefit when that market recovery occurs. Nevertheless, the future is not known – as unexpected events of 2022 proved – and markets could fall again in the meantime. So our portfolios must prepare for a variety of outcomes. This is why we diversify our clients’ portfolios with different asset classes and investment products – looking for steady growth over the long term rather than chasing potentially transient opportunities. As we stand, there is plenty of negative news around, but contrary to popular opinion, markets may currently provide the best opportunity to invest than has existed for some time. If you are looking to invest or know someone else who would benefit from professional investment advice, please talk to your Lowes Adviser and have them call us. As ever, we will be delighted to help.

AS WE START 2023 THERE IS PLENTY OF negative news around – high inflation, interest rate rises and a recession predicted by the Bank of England to be one of the longest in recent years – which can all weigh heavily on the collective psyche. This is not limited to the UK, economies around the world are also affected. For investors, 2022 was a difficult year, with very few assets preserving capital let alone earning a positive real return. Global equities and bonds suffered steep falls, in the case of bonds, one of the worst periods in decades. It is not surprising therefore, that the general perspective on the economy and the prospects for investments in the year ahead have been suffering. Popular opinion would have you believe this is the worst time to invest. But it is markets like this in which professional investors build wealth. How the investment market and the economy are assessed differ, and this is important. Data on the economy is always backward facing – published at least a month in arrears. Stock markets on the other hand are forward facing. Investors will look to where the economies are going rather than where they have been. An example of this is the positive reaction of markets to small improvements in inflation data – looking ahead to when inflation begins to reduce and growth starts to return. Professional investors will be used to the ups and downs of the stock markets and know that markets invariably recover earlier than economies. They will look for areas which can weather the current storms and to where there are signs of recovery. For this reason we believe active fund management is essential to deliver the best returns for investors, staying clear of areas which may suffer over the next couple of years and finding the opportunities amidst the negative noise. For ordinary investors, it can be difficult when there is a negative outlook to want to continue to put money into the market. But it is when markets are at a low point that having a contrary outlook can be the most rewarding.

Ian H Lowes, Managing Director

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