Fund managers say keep cool in volatile market
Stock markets are likely to remain volatile for some time dogged by persistent worries about a U.S. recession and the credit crunch, fund managers said on Wednesday, with Fidelity advising investors to keep their cool.
Fear of slower growth in the world’s largest economy has been a key driver behind the recent slide in global stock markets. The MSCI World index .MIWD00000PUS has lost 13 percent this year to reach its lowest level since November 2006.
“So what should investors do in this situation? My advice is … wait and see,” Michael Gordon, head of investment strategy at leading mutual funds group Fidelity International said in a note.
“History teaches us that it’s best to do nothing in a situation like this.” All too often, private investors enter a market at too high a level and exit at the bottom, after a crash, he said.
Dominic Rossi, head of equities at Threadneedle said her company’s equity portfolio became more defensive — health care, energy, telecommunications — in the second half of 2007.
“Investors must count on volatility remaining high in the immediate future,” Rossi warned in a note.
Max King, strategist at Investec Asset Management, said stock prices had fallen so much that investors expected a significant fall in corporate earnings this year.
“While the consensus of analysts’ forecasts shows global earnings growth of 13 percent in 2008, the consensus .. cash advance flexible payments. (elsewhere) … is that these numbers are worthless,” he said in a note.