Consistency, strategy and coherent investment views have all but vanished as managers await a market lead
The markets are in limbo. Fund managers, I am told, are 'looking for direction'. They are seeking the 'next big thing', they are 'anticipating a lead'. This is distinctly worrying. It sounds like a child who has worked their way through the sweetie jar and then starts rummaging round the cupboards for some other diversion. Whatever happened to consistency, strategy and coherent investment views? Proven ability has given way to luck and bluster. Flair has disintegrated into fumble.
So I, like thousands of other private investors in the next three months, will not be rushing out to buy the next lacklustre product flung on the market by increasingly desperate marketing teams. Why? I plead confused ' baffled, my Lord. These guys are not convinced they know what they are doing and are prepared to say so publicly. Why should I trust them?
As there is no consensus in this market, even contrarians are at a loss. One top fund manager is sticking with food retailers, the core holdings of a concentrated portfolio, blah, blah. But one moment...I thought we were out of defensives and bracing for the comeback of the technology and media stocks? Cycles seem to be spinning faster than a washing machine, with an effect almost as hypnotic.
The Christmas high street splurge may have saved us. Or has it? The spending data coming through is way below expectations. Are the figures unreliable or the projections too ambitious? For those investors who loaded up on Next and Marks & Spencers stocks, hoping their share prices would rise with sales, the shops are alarmingly empty. Are consumers spent out already? However, a bulletin straight from the front line, from the delightful assistant at the City Finsbury M&S (you know who you are): 'the punters are willing, but the re-stocking procedures are weak.'
So here is my prognosis du jour: consumers are happy to keep spending, they are just not interested in buying investment products. That is good news for companies, bad news for the personal finance industry. This is perfectly sensible behaviour, at one level. Why engage in the market when it is so volatile and the performance of most funds so poor? Ride a rising market but jump off at the first sign of trouble. Ordinary people, unlike professional investors, do not have to be invested. They can think of many more amusing ways to lose their money. This is a fact the industry still needs to accept. The words 'should' and 'ought' look pale and peaky stood next to 'spend' and 'enjoy'.
The crunch will come a little later, of course, when job cuts meet big debts. Then there will be tears. The UK may get bailed out just in time by a US-led upswing but even that is looking a little doubtful. Alan Greenspan, chairman of the US Federal Reserve, has practically begged investors not to rely on an early economic turnaround. Here, speculation last week that the next move by the Bank of England would be an increase in interest rates has given way to new hopes for rate cuts.
Meanwhile, the uncertainty is provoking investment marketing that is getting wilder by the week. I have received more than my fair share of invitations to buy sure-fire commercial property in Weston-super-Mare, or to take advantage of the fantastic tax breaks of Forestry Venture Capital Trusts. Yet nobody can tell me whether Neil Woodford is going to stay on at Invesco Perpetual after May, or whether cross shareholdings among split capital investment trusts are really a threat. Now that information really would give me direction.
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation