During his keynote speech at the National Association of Pension Funds’ investment conference last Wednesday, the former manager of Fidelity’s special situations fund said he was optimistic that markets across the world were bottoming out.
Bolton said: “I think we are at or near the lows in stockmarkets and there are some very tentative early signs that things are improving.”
He said intensely negative consumer sentiment generally signalled a turning point and the current situation was the worst he had seen since the 1970s.
He said: “In the past, you can see when consumers are very negative, it has nearly always coincided with turning points or bottoms in the market. The consumer is very negative today and I think this will again coincide with a low.”
Despite being underweight in banks in the past, Bolton suggested they were an attractive place to benefit from the upturn.
He said: “Financials have very much led this downturn and they will be very much at the heart of the upturn as well. Banks over the years have generally been a place where I have been underweight because they are very difficult to analyse and it is very difficult for an outsider to know the true position of a bank, but I think that if you buy a basket of banks today, you will do well over the next few years.”
He also believes non-life insurers and property are attractive sectors as well as consumer cyclicals, technology and value stocks.
Bolton said that he was supportive of the FSA’s recent ban on short-selling although he questioned the regulator’s timing in removing it.