Regular readers know of Anthony Bolton, the legendary fund manager in the UK who retired last year. He's interviewed in today's Daily Telegraph about where to invest in the current Bear market. He rightly says that if times like this make you unlikely to stay invested in equities, maybe you shouldn't be in them. But what about those of us happy (what a word!) to own stocks in these lousy times? Bolton says focus on large, good quality companies.
And this:
"I therefore have been advocating a switch out of commodity stocks into a basket of shares in banking groups which have already had their rights issues. This strategy will take patience: I often take a two-year view on an individual stock which I believe to be mis-valued because you can never be sure when the catalyst for a revaluation will take place.
"Another reasonably attractive and safe area is the pharmaceutical sector, which has traditionally been viewed as a haven in difficult markets. This time around it has held up better than other sectors. Year-to-date, pharmaceutical stocks have dropped by 4.7 per cent against a market decline of 16.8 per cent and over three months the sector is up 4.6 per cent
"What about emerging markets? Well, I do believe that they represent good long-term investments but I do not believe they will be immune from the slow-down in western economies in the near-term. We have begun to see this in the last few months, along with the impact of profit-taking by investors.
"Finally, I'd point out that the worst mistake a private investor can make is to be sucked into markets when they are high and the prevailing mood is the most optimistic, only to then get shaken out at times like this when prices are falling and the outlook is uncertain. It normally takes many years to recover from this experience. Please don't let this happen to you."
Bolton believes we are more than half way through the current bear market. And that a patient investor taking a two to three year view should be well rewarded by putting money into selected areas of the market over the next few months or buying a good fund.
Good -- and timely -- article. Read the whole thing.
Comments