Actuaries rather than fund managers are deciding the UK market's level, according to Trevor Green,...
Actuaries rather than fund managers are deciding the UK market's level, according to Trevor Green, director at Allianz Dresdner.
The current bearish market conditions are being driven by life companies making forced share sales to meet solvency requirements, he said. If managers focus on this short-term environment they will miss out on the chance to buy companies cheap, he warned.
Many investors are taking too much notice of short term indicators, he argued. Green said: 'Too much attention is paid to trading statements and broker recommendations, there is a need to look on much more of a long term basis.'
He stressed the need for a more grass roots approach to investing and argued investors should look at their own behaviour when deciding which companies to buy.
Green said: 'If you look at your own travel patterns and the differentials between budget airline operators you may conclude that Ryan Air has come to the end of a good run.'
Another theme Green identified is the opportunities and threats presented by acquisitions. Although merger activity has become less common recently, he said good quality deals should lead to strong gains for investors.
He pointed to the acquisition by Royal Bank of Scotland (RBS) of NatWest leading to an increase in RBS shares of 75% while the UK banking sector dropped 3%. He contrasted this with Emap whose acquisitions have damaged its share price.
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