28 June 2018

When will it all end?

Speaking personally, football is of little interest to me.


Rugby – now that’s a different game altogether, but it is hard to escape the fact that there is a football World Cup taking place. As it happens, England has been delivering a more solid performance in Russia than many felt likely. Couple that with the fact that summer has arrived in style and investors can be forgiven for paying little attention to the vicissitudes of the stock market.

Fortunately, shares are holding up reasonably well and there is no end in sight for this lengthy bull market that has its origins in the recovery from the financial crisis of nearly a decade ago. It is America that has been leading this impressive run in share values. The S&P 500 Index, the US equivalent of our Footsie, has risen nearly fivefold – the technology biased NASDAQ even more. Germany is up by a little over 200%, France by a little less. Technology rich America has been winning all the prizes

Our own FTSE 100 Share Index has risen by less even than France. Indeed, at its current level, which is not too far away from its 2018 high, it is less than 10% above its previous peak in 1999. While its rise from the dark days of 2009 has been more significant, we are hardly amongst the frontrunners, even if we have outpaced emerging markets in general, though lagged Hong Kong which has been chasing the US hard.

We are now entering the silly season, with little of importance on the horizon, save the increasingly loud noises coming out of the Brexit debate. With our departure less than nine months away and a trade war with the US looming, it is little wonder that industry is expressing its concerns in an ever more vocal manner. And the fact that our benchmark index appears to be largely ignoring it is testament to the international nature of our leading companies.

But it is to the future we should be looking. Brexit may be dominating investment thinking at present, but it is by no means the only game in town. A hard departure from the European Union might cause shockwaves here, but its impact on the global scene is likely to be more muted. When the next bear market comes – as it surely will – it will doubtless start in America. Perhaps it’s best to just enjoy the fine weather, hope that England’s run continues and not worry about when or why this bull market might end.


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