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Flashing red lights? Most managers don't think so

Bearish fund managers have found their voice as markets endure a tough few weeks, but most remain bullish.

Flashing red lights? Most managers don't think so

Bearish fund managers have been sounding some alarming warnings of late. 

Neil Woodford hit headlines last week when he claimed that investors had 'forgotten about risk', with markets exhibiting 'so many lights flashing red that I am losing count'.

He wasn't the only one. Henderson European Focus (HEFT ) manager John Bennett has also been warning of excessively expensive stock markets and a looming 'mean reversion'.

And there was Legal & General Investment Management, flagging that a 30% correction in stock markets next year was not out of the question.

That, coupled with a tricky month for stock markets, could be enough to put investors on edge. Ever since the financial crisis, the fear of a similar meltdown has never gone away for many, even as shares have enjoyed an eight-year bull market.

Take a look at our exclusive Accumulator data table. A rolling month that has produced heavy losses for investors in some markets, with China down 6% and emerging markets falling 5%, will likely have raised jitters among some.

But despite these market warnings, it's worth bearing in mind that on the whole,  fund managers remain bullish.

There are some, like Nick Train, who always are: the Finsbury Growth & Income (FGT ) manager believes that, unless you're able to predict the direction of markets, it's a more profitable disposition over the long run.

But even those who haven't adopted this approach are still broadly optimistic about the progress of markets. A Reuters poll of UK fund managers today found most were raising their exposure to equity markets, while last month's survey from Bank of America Merrill Lynch showed fund manager risk-taking reaching a record high.

Of course, fund manager bullishness is open to multiple interpretations, especially given that same Bank of America survey showed the numbers believing shares to be overvalued also reaching a record high.

Some will see in those apparently contradictory responses the sign of the euphoria stage that precedes a crash, adding the bitcoin mania of recent weeks to their weight of evidence.

Others, wary of being unable to time markets, will adopt a Train-like response. 

For many that count themselves neither particularly bearish nor bullish, it's likely the same calculation will apply as has done for the bulk of the eight-year bull market. Yes, shares look expensive, but so does everything else, and in the case of bonds, even more so. And with cash yielding little, this lesser-of-evils argument may continue to send stock markets climbing the wall of worry.

To see the Accumulator table, click here.

7 comments so far. Why not have your say?

Hank Elvis Dobbs (texan)

Dec 08, 2017 at 15:35

Buy uk equities .....the figures are wrong ....don't underestimate the army of white van men (and women) spending all that cash from all that shoddy workmanship.

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Dec 08, 2017 at 15:47


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Paul Hastings

Dec 08, 2017 at 17:09


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Peter in Cornwall

Dec 08, 2017 at 17:27

Just work it

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retired investor 2

Dec 08, 2017 at 18:34

what do vans spend their money on exactly ?

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Dec 08, 2017 at 23:28

Don't knock white van drivers. After I became unemployed at 53 and could find no job I turned to a white van and for 15 (49 week) years covered an average of 500 miles every 16 hour day. It kept a roof over my head and allowed me to retire in reasonable comfort.

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Ian Holmes

Dec 09, 2017 at 13:44

Another CityWire non-story. Yawn!

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