That will teach me to try and plan a column weeks ahead of when it is actually due. Having spotted the steadily diminishing number of market pessimists around at the start of the year, I had decided to pen an insightful piece that took as its text the classic of toddler literature that is We’re going on a bear hunt.
Although I have never actually got around to reading the book to either of my own age-appropriate brood, I am broadly aware of the plot – upbeat family go on engagingly onomatopoeic bear hunt, find bear and are pursued by it all the way back home where they resolve to lead a much less adventurous life.
Any concerns I may have had about spoiling the ending for those yet to tackle the book would have been offset by my observing the lack of bears – or for that matter the increasing media profile of late of legendary short-seller Jim Chanos – represents an excellent signal to reassess market levels and one’s own positioning.
However, I would have continued, there is little point actively hunting for bears since, in markets, as in children’s fiction, they will put in an appearance soon enough and leave you wanting to run home and lock your door – a conclusion investors have clearly not needed my help to reach over the last few weeks.
On the bright side, this has freed me up to go on a bull hunt – a more upbeat pastime though considerably less challenging, seeing as I have just been out chairing the 2014 Alpha Generators Roadshow. When managers present on their funds, pessimism tends to be in short supply and so it proved this time around.
After nine days on the road, I concede a chairman can risk a sort of Stockholm syndrome, where he starts believing he is introducing the five greatest investment opportunities ever but, even so, Aberdeen, BlackRock, F&C, First State and Neptune made convincing cases for, respectively, strategic bond funds, European equity income, UK commercial property, global agribusiness and US equities.
To focus only on the last of these, Rebecca Edelman, a US equities portfolio manager at Neptune, addressed the very pertinent question as to whether US market outperformance can continue – and particularly whether the sell-off of recent weeks represents a buying opportunity or the end of a secular bull market.
To her mind, while investor concerns such as rising valuations and the process of QE tapering persist, the US market can continue to climb its “wall of worry” thanks to four factors thus far absent from the good run of the last four or so years – new capital expenditure, an acceleration in M&A activity, increased credit growth and above-average economic growth.
After identifying such promising long-term foundations for the US economy as energy independence, an improving housing market and shrinking budget and trade deficits, Edelman saw no reason why the US could not continue to outperform. Now, next month, shall we consider the investment lessons hidden within The Hungry Caterpillar?
Julian Marr is editorial director of Adviser-Hub and co-author of Investing in emerging markets – the BRIC economies and beyond
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