Citywire for Financial Professionals
Share this page:
Stay connected:

Citywire printed articles sponsored by:


View the article online at http://citywire.co.uk/money/article/a871712

Buy low, sell high: will it finally pay off in 2016?

The last couple of years haven't rewarded contrarian investors. So should you just buy more of the same in 2016?

 

by Daniel Grote on Jan 06, 2016 at 11:12

Buy low, sell high: will it finally pay off in 2016?

For all the uncertainties that lie ahead in 2016, many investors’ outlook for the year will depend on the answer to one question: can we expect more of the same?

While global markets have largely traded sideways over the past couple of years, that hides wildly divergent trends for defensive, income-producing assets and growth stocks, which have become ever-more expensive, and anything to do with commodities, which has been hammered.

The ‘buy low, sell high’ mantra would dictate that 2016 would be the year to scoop up bargain-basement miners and oil stocks. But then you could have said the same thing at the beginning of 2015.

Over the last couple of years, it hasn’t paid to take a contrarian approach to investing. To beat the index, it’s only really been necessary to not own oil stocks or miners, or at least own them in minimal amounts. That’s one of the main reasons why it’s been possible for fund managers to be sitting towards the bottom of the performance league tables and yet still beat the market in recent years.

But Alex Wright, Citywire AAA-rated manager of the Fidelity Special Situations fund and Fidelity Special Values (FSV ) investment trust, warns against complacency.

‘The market trades on a valuation more or less in line with historical averages, so neither looks dangerously expensive nor attractively cheap. However, digging a little deeper reveals significant differences in valuations between companies and categories,’ he said.

‘As we enter 2016, I think investors would do well to ensure that their portfolios do not rely on recent trends continuing indefinitely. If there is one lesson the stock market teaches us over and again, it is we must be prepared for change.’

Over the next few slides, we feature the views of fund managers on how they see the major global stock markets performing next year.

Next: Dividend danger in the UK

Sign in / register to view full article on one page

3 comments so far. Why not have your say?

J Thomas

Jan 07, 2016 at 14:04

Buy low, and forced to sell lower.

There will come a time to buy, that time will be when the FTSE is below 4500 at the end of August 2016. The only asset which will make money in 2016 is physical gold bullion and coins.

report this

Hampshire cynic.

Jan 11, 2016 at 10:24

How many times have pundits advised selling up and resorting to gold?

As for gold coins, bullion, the premiums extracted by the bullion dealers are pure extortion, and then there is the risk of theft etc.

The most significant risk, currently to my mind, is London property ownership.

report this

Bestmate

Jan 12, 2016 at 19:27

To J Thomas

Look if your well positioned whether the market goes up or down is largely irrelevant if you hang in there and don't crystallise losses. 55% of my portfolio is in largely defensive, value stocks. I have 45% cash sitting on the sidelines. If the markets fall or crash I buy in cheap and wait for my the rest to claw back to recovery - which they largely will do.

Gold? If I had followed the predictors of the doom and gloomsters since 2008 I would be considerably poorer.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sponsored By:

More about this:

Look up the funds

  • Fidelity Special Situations A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Invesco Perpetual Income Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Invesco Perpetual High Income Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Neptune US Opportunities A Acc GBP
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Jupiter European Special Situations Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Schroder European Alpha Inc A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Schroder European Alpha Plus Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Jupiter Global Emerging Markets Inst Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Fidelity Emerging Markets Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Carnival PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • BHP Billiton PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Centrica PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Glencore PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • J Sainsbury PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Tesco PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Fidelity Special Values (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Alex Wright
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Richard Marwood
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Mark Barnett
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Felix Wintle
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Nick Peters
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Cedric de Fonclare
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • James Sym
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Ross Teverson
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Nick Price
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Latest from Investment Basics

See all headlines

Sorry, this link is not
quite ready yet