More hands-on active portfolio management, keeping faith with stock markets and avoiding any temptation to chase Bitcoin mania, are some of the main messages for investors through 2018.
That’s according to Mark Haefele, the chief investment officer (CIO) of global investment bank UBS, a man who effectively calls the big shots on around $2trn worth of invested assets. He’s also a former lecturer and acting dean at Harvard University.
GREAT MARKETS FOR INVESTORS
2017 has been a good year for most investors. The global economy is set to deliver its strongest growth since 2011, and world stocks are set to have delivered an advance every single month, an unprecedented streak.
UBS anticipates similar in 2018, with another year of respectable economic growth, higher corporate profits, and rising equity markets. ‘The risk of a downturn appears low.’
But as Haefele neatly puts it, ‘while our view on markets is positive, this doesn’t mean investors will have it easy.’
THREE IMPORTANT POINTS
The CIO’s three key messages to investors are:
Stay in stocks into the New Year, ‘the long-term outlook for stocks remains bright,
Shun Bitcoin but bite at Blockchain, ‘we believe this has all the hallmarks of a bubble, instead we advise investing in the underlying Blockchain technology
US rates are rising but the Fed remains cautious, ‘we think it is unlikely that policymakers will raise rates at a faster pace that could cause a recession or derail equities.’
Haefele also has further words of advice.
Be more agile. Changing market dynamics give us confidence that a more agile investment stance will pay off next year, opening up market opportunities that arise from shifts in monetary policy, political developments, and technological change.
Strive for balance. Any outperforming investment, whether it’s a single asset, a favored sector, or an exciting country, can tempt us to increase our portfolio concentration.
This classic investor mistake looks particularly risky in 2018. Balancing a combination of equities, bonds, and alternatives can reduce investment risk.
Stay calm. Accessing investment or company-specific information has never been easier. But this overload can lead to poor investor outcomes.
Maintaining a long-term focus is critical and also requires investors to resist ill-considered investments based on the fear of missing out (FOMO).
