It was the week of the G20 meeting in London, so opinion was offered rather than bid. Perhaps the most comforting element in the plethora of views was the lack of consensus.
I always find divergence of views encouraging. The old saying that the crowd is usually wrong cannot be applied when no one really knows what to expect. We are in uncharted waters and it is pure guesswork as to what the final outcome will be.
On the positive side rests those who believe our fortunes are so interwoven that, regardless of political rhetoric, a way will be found through our problems. The negative camp comprises those who fear a descent into depression and protectionism.
Tempting as it is to opine on likely economic outcomes, my standpoint must remain the way in which investors should position themselves in these testing times.
It could be that an opportunity par excellence is presenting itself. With cash returning next to nothing and sovereign bonds offering poor returns, surely equities deserve a reappraisal? Then again, what if a prolonged period of negative growth is unavoidable? Oh for the gift of second sight.
The straws in the wind gather, though. Last Thursday’s Docklands mediafest might provide a signpost, although it will be the implementation that counts. Meanwhile, a rise in the price of oil and the recall of thousands of workers from unpaid leave to resume production of micro chips suggests de-stocking has run its course. Now we must judge whether this presages a real pick-up in demand.
The market certainly took heart at the positive outcome from those with control over 80 per cent of the world’s economy.
The price for the historic agreement appears to be greater regulation in the financial sector – not necessarily good news for the Square Mile. We may not consider ourselves a tax haven in the City but in many ways we are. One thing is for sure, the age of the mega bonus has passed, perhaps for ever.
Elsewhere, the signs that might point to a sustained recovery in markets’ fortunes are mixed. Nationwide’s house price survey suggested the steady decline over the past two years or so has moderated. Perhaps more important, mortgage applications are rising. The removal of the stalemate in the housing market will do much to restore confidence but it is not sufficient to turn the economy round unaided. Anyway, prices in the US have yet to steady, having lost nearly 30 per cent peak to trough.
Overall, I do not feel the need to revise my more bullish stance but I am realistic enough to recognise we are far from out of the wood. The profit-taking that took place at the end of last week demonstrates that investor nervousness remains. Much is riding on the trillion dollar package aimed at restoring global economic fortunes but its success is far from guaranteed. There will be bad days in the weeks and months ahead. They may be just the days to buy, though.
Brian Tora (firstname.lastname@example.org) is principal of the Tora Partnership