Markets closed to good news, suggests SIG’s Hughes
Ryan Hughes, portfolio manager at Skandia Investment Group, suggests that with the market closed to good news, opportunity may be there for the contrarian investor.
The summer of 2011 has turned out to be the worst quarter for equity markets in almost 10 years. Not exactly the best back drop to be extolling the virtues of equity markets and opportunities but history tells us that the best time to be buying equities is before you start hearing the good news, you just hope your timing is good enough to come after the worst of the bad news.
Has that time come? Despite the raft of bad news that seems to be coming out of everywhere recently, there are small signs on the horizon that things may not be quite as bad as everyone thinks. We have seen positive surprise coming from the US on some data, potential loosening of Chinese monetary policy, German business confidence is better than expected, while equity valuations are at extreme levels almost pricing in a double dip in the US.
Maybe it’s the contrarian in me, but I don’t think the market is interested in these minor good news stories right now. And that tells me that opportunities exist for investors, particularly those who can invest with a sensible medium term time horizon.
Ryan Hughes is portfolio manager at Skandia Investment Group.