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Spot the bull competition

Fund guru Anthony Bolton’s call on a bull market has been greeted with scepticism by other managers and IFAs.

Many industry experts predict a gloomy outlook for the global economy but Fidelity International president of investments Bolton, who ran the flagship Fidelity UK special situations fund for almost 30 years, has been pointing to a bottoming-out.

In March, Bolton said he felt the washing-machine-style turbulence in stockmarkets was coming to an end, adding that consumer negativity would coincide with the market low as it did in the 1970s.

Bolton now believes that a bull market has kicked off in equities, with financial shares likely to drive recent gains higher.

In an interview with Bloomberg, Bolton said: “All the things are in place for the bear market to have ended. When there is a strong consensus, a very negative one and cash positions are very high, as they are at the moment, I would like to bet against that.”

His call comes as the FTSE 100 rose by 8.1 per cent in April, having sunk below 3,500 in March. On May 7, the blue-chip index broke through the 4,500 barrier, with financials leading the recovery.

But not everyone is as bullish as Bolton.

Invesco Perpetual income fund manager Neil Woodford said the economy was in a “prolonged adjustment” and did not expect the market to turn for three or four years, stating that banks in particular were likely to be a bad investment within that timeframe.

Rathbone chief investment officer Julian Chillingworth says he is unconvinced we are not just seeing a bounce from an oversold position. He notes the market is probably in the midst of bottoming and he is not even sure that is the case for the UK.

He says: “Here the consumer is key, so I would need to see more signs of a bottoming in the housing market.”

Thames River co-head of multi-manager Gary Potter says there are plenty of clouds overhead, casting doubt over the start of a bull at this stage.

He says: “Stockmarkets are driven by earnings and these are unclear in the next 12-18 months, with headwinds like equity issuance and banking problems. I would expect to see fits and starts.”

Hargreaves Lansdown head of research Mark Dampier agrees with Bolton that sentiment has been awful, with investors choosing to sit on cash, but he is concerned that pundits calling the bull are being over-optimistic.

He says: “My main worries are still around the housing markets. In the US the housing market, which started to fall a year before ours, is still going down and I believe the somewhat improved sentiment around our own is a mere spring bounce which will peter out later in the year.

“Maybe the March low of 3,500 on the FTSE did actually represent the bottom of the market. I certainly would hope so but the summer is a notoriously volatile period and banking crises often take a long time to solve, so my suggestion remains the same and that is to buy in the dips. Inevitably when sentiment is poor, prices are low and that is the time to at least start putting some of your hard-earned cash into the market.”

Whitechurch Securities managing director Gavin Haynes believes the market may well be levelling out following an overreaction and pricing in of recession.

He says: “We are remaining cautious as we feel volatility is still rife, particularly going into the summer months. We feel the outlook for equities in the medium to long-term is good.

“However, it is a surprise to see the stark contrast in attitudes from being defensive to moving into high-risk equities and bonds so quickly.”


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