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Signs of the times

Naturally, I would never dream of contradicting the good, good people of Fidelity or indeed other less fervent preachers of the gospel that, when it comes to investing, it is time in – rather than timing – the market that counts.

However, I do wonder if there might be something to be gained from looking for signs that a market is hovering around its top or, more pertinently these days, its bottom. Not technical signs, of course – that would be far too dull – but little signals that really should have set off bells and sirens when they first appeared and which might be instructive to bear in mind for the future.

Let’s start at the top of the market – indeed, let’s start at the top of this column’s favourite market, the tech boom that short-circuited in early 2000. Yes, you could point to the price/earnings multiples that were out of whack with anything history and very possibly the universe had ever seen. But I prefer to highlight the excuse, sorry, intellectual argument put forward to justify this – that we had entered A New Paradigm.

Ah yes, a cunning variation on what Sir John Templeton described as the four most dangerous words in investing – “This time it’s different.” Still, the New Paradigm was being bandied around over a period of months so I would suggest one can be a bit more precise on the top of the tech boom thanks to another little signal – the launch of the fund with the very silly name.

Gartmore UK techtornado – need I say more? Yes, it is cruel to single out one company – seriously, though, techtornado? – but I reckon that, as that fund went live in mid-February 2000, the tech bubble clock was about five minutes away from striking pop.

Enough toppy signals, what about indications that a market may be about to turn for the better? Normally, one might take the failure of a UK gilts’ auction as a possible sign that investors’ appetite for equities might be returning although, this time round, it seems more likely that there is simply a limit to the amount of Government debt that people are willing to fund.

Instead, let’s turn our attention to Jupiter China sustainable growth, an investment trust whose launch was pulled on March 19. According to the board, while Jupiter received “a high level of interest in the proposed launch, commitments from prospective investors unfortunately fell just short of the $50m that the company believed was required as a minimum launch size”.

Leaving aside the question of precisely how much constitutes “just short of” in the context of £35m – hey, if they had let me know, I would have happily organised a whip-round – and ignoring the no doubt very strong reasons why the company did not make up that just-short-of figure itself, what does this say about the state of equity investment today?

Investment companies get a huge amount of criticism for launching funds into a bull market – and rightly so. Yet here we have Jupiter showing the sort of grit and foresight not always immediately associated with the wonderful world of fund management – and being rewarded with a collective shrug of indifference.

Why? As a company, Jupiter is not too shabby at this investment business. The manager lined up to run the fund has more than a passing acquaintance with emerging economies and, in a list of markets one might reasonably expect to reward investors over the next 10 years, you would have to think China would be near the top. There was even the feelgood factor of the sustainable growth angle.

Perhaps that was part of the problem. Maybe investors felt the launch of a fund that planned to fish in a pool that combined China with socially responsible investing fell a little too close to April fool’s day for them to feel entirely comfortable that it was not some sort of practical joke.

Maybe, although I am prepared to attribute greater significance to the whole affair and take it as a sign, equity investors really have thrown in the towel – one of the fundamental requirements for a market upturn. Still, poor old Jupiter, eh? Hey, apparently it is possible to feel sorry for a fund group although not, of course, if it ever uses words like techtornado.

Julian Marr is editorial director of


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