— Nov 28, 2019


Sir John Templeton, one of the most legendary investors of the 20th century, is famously quoted as saying “Bull markets are born on pessimism, grow on scepticism, mature on optimism, and die on euphoria,” he said. “The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”

The current global equity bull market is now officially the longest ever. This has been largely powered by the US indices which are now at record highs, and given that they remain the world’s largest by some degree then the global indices have continued to show progress.

However, this euphoria has not been shared by other major markets. European equity markets stand below their peak of a few years ago, whilst emerging markets have actually endured bear markets during the period.

Here in the UK, one would say that we were more between the pessimism/scepticism stage of that statement. As we have previously commented, the Brexit issue has served to keep investors away from the UK market, albeit unfairly in our opinion, and the FTSE100 remains well below peak levels.

One might say a lot has changed in the UK over the past month with a general election being agreed and with it the prospect of some resolution, and indeed currency markets appear to be more optimistic with sterling rising against the dollar (one way to think about currencies are as share price of a country reflecting its economic prospects i.e. a rising currency indicates favourable economics  and vice versa).

However in terms of our outlook, current asset allocation and investment strategy, nothing has changed. We remain overweight UK equities and underweight the US.
Templeton attributed much of his success to his ability to maintain an elevated mood, avoid anxiety and stay disciplined. Easy to say, however we shall endeavour to replicate this attitude with regards to our own investment stance.