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James Hambro: why this bull market is 100 not out

The current bull market reaches its 100 month anniversary on Sunday, but Rosie Bullard of James Hambro & Partners believes the lengthy rally has further to run.

 
James Hambro: why this bull market is 100 not out
 

The current bull market reaches its 100 month anniversary on Sunday, but James Hambro & Partners (JH&P) believes it has further to run.

The bull market began on 9 March 2009 in the UK and US, with the FTSE 100 up over 108% since. Since then, the markets have weathered the euro sovereign debt crisis, two general elections and the EU referendum vote, but Rosie Bullard, partner of the London-based wealth manager, urges investors to keep their money in equities (shares).

‘The saying that bull markets climb a wall of worry is as true of this as any. We’ve had austerity, Brexit, [Donald] Trump, elections in Europe and the debacle of the recent UK general election, but markets are still holding their nerve,’ she said.

‘People have been calling the end to this bull market since Brexit, but living in fear of an imminent bear market can be bad for your health and wealth. Anxious investors who pulled out of the FTSE 100 in the wake of the Brexit result have lost out on around 24% of returns.’

The FTSE did suffer a technical correction in January 2016, but the speed of the recovery meant it was not defined a bear market. That means the current bull market, being past the 8.1 year mark, has outlived the average bull-run historically, and like others has averaged annualised double-digit returns.

Boston-based Newfound Research has identified 12 bull markets in the US between 1903 and 2016, with the average lasting 8.1 years and the longest (between May 1947 and December 1961) lasting 14.6 years. 

‘Bull markets tend to last much longer than bear markets and can be very rewarding, if you can cope with the anxiety! The problem is that bear markets can be very painful and this sears in the memory of investors who, behavioural economists tell us, fear losses more than they enjoy gains,’ Bullard said.

The bear fears

JH&P investment manager James Horniman said while price to earnings ratios are high in many markets, monetary policy remains supportive of equities, while economic data is improving, resulting in positive earnings revisions.

‘Quantitative easing has pushed bonds into bubble territory and squeezed yields to levels that are unsustainable. That is driving investors into equities and further supporting equity markets,’ he said. 

‘We do see pockets of irrational exuberance and the market failure to react to the general election result makes us concerned that they are becoming desensitised to political shocks, but we think this bull market has longer to run.’

1 comment so far. Why not have your say?

The Old Man

Jul 06, 2017 at 10:05

There are only two groups of people who predict stock market movements, those who know they don't know and those who don't know they don't know!

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