If you want a particular outcome, then it seems as though the best way to guarantee a result is to nail your colours firmly to the mast of the opposite of that which is desired. At least, that is how it felt to me as I watched the pound recover ground once the phoney war between our political parties dissolved into a real conflict once the election date was named.
My damning remarks last week over the likely direction of sterling are looking premature – in the short term, at any rate.
Interestingly, Schroder’s Richard Buxton appears to be taking the same view on the likely fate of our currency, although he is of the opinion that markets will shrug aside the vicissitudes of an election campaign that will see wild swings in every direction you can imagine.
For my part – and I speak as a political insider – I find it impossible to forecast the outcome, such is the apparent lack of interest by the electorate.
On what I hope will be my last pronouncement on a topic that I feel certain will be rammed down our throats in an aggressive manner by the media, I find I have sympathy with the manager of Schroder’s UK alpha plus fund.
Membership of political parties has been in decline for some time. The approach of our two major contenders has moved so much to the centre ground that it has become increasingly difficult to tell them apart.
As for the third force in British politics, while the Liberal Democrats may have made up ground in recent years, I find their stance more that of someone trying to find something on which to disagree with two more robust characters than in delivering distinct policies.
Yet this may well be the election where a disenchanted public decide a plague on all their houses (or at least the houses of the top two parties) and support less mainstream candidates.
The underlying problems that might affect markets will be the same, whoever wins
With such uncertainty, investors could be forgiven for taking the view that the outcome is at best irrelevant or, at worst, unlikely to see any dramatic change in direction.
The underlying problems that might affect markets will be the same, whoever wins. Reducing the crippling debt burden, both personal and sovereign (corporate debt, interestingly, looks less of a concern), stimulating economic regeneration and managing the global trade transition is what will count. There are not many votes in any of those issues.
It is the last of these – the inexorable transfer of power from developed to developing worlds – that provides the most interesting insight into why markets here are as robust as they are.
We know now that the service sector is recovering faster than manufacturing, no doubt driven by our ability to sell our expertise to emerging nations. And the shares that go to make up the leading 100 share index in the UK are global players in the main, with little at stake in the domestic economic scene.
Still, I feel a period of at the least consolidation, perhaps even profit-taking, coming upon us before too long.
I could be wrong, though. Barclays Wealth, I read, is advising clients to take profits in emerging markets and buy into cheaper UK stocks. And as Richard Buxton pointed out in an article last week, there are plenty of investors sitting on the sidelines waiting for a setback that may never happen. Investment is never easy, nor outcomes certain. A bit like politics, really.
Brian Tora (brian.tora@ centaur.co.uk) is principal of the Tora Partnership