Panic and forced selling are creating excellent opportunities in the equity market, according to Rob...
Panic and forced selling are creating excellent opportunities in the equity market, according to Robert Waugh, head of UK equities at Edinburgh Fund Managers.
Speaking at the Investment Week Markets Forum earlier this month, Waugh argued that bear markets following bubbles often present investors with good buying opportunities. He pointed out that during the past 12 year bear market in Japan there have been nine rallies with an average rise of 30%. He said: 'It's like the shop is closing down and everything is going for £1. Forced sellers, such as insurance companies, are presenting great buys for those looking for bargains.'
He cited the example of food retailers which have seen a 23% increase in gross profits over the past two years. Fears of deflation leading share prices to plummet are causing investors to panic but these fears are exaggerated, he said.
On opportunities for equity investors going forward, Waugh stressed the need to buy quality companies. He said the differences between growth and value equities had diminished so that historically neither looked cheap relative to the other.
He argued fund managers were currently hamstrung by the need to follow their peer group. He said: 'Fund managers are tying their legs together. Rather than going for absolute returns, managers seem to have an attitude of saying we may have fallen over. but at least we're not as badly hurt as the others.'
Two global vehicles
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Advisers do come out well
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