Entries by Mark Maloney

Market Commentary February 2021

In 1849, Jean-Baptiste Alphonse Karr wrote, “The more things change, the more they stay the same”. Now, over 170 years later, technical analysts are using his prophetic statement to warn investors of a potential top. The stock market is indeed high and is characterised by typical market exuberance – whether it is historically low put/call ratios, record-high active investor equity exposure, record levels of margin debt or very high levels of bullishness on investment polls. At these times, it is worth recalling Humphrey Neill’s 1954 book, “The Art of Contrary Thinking,” where he wrote that the public is often right during the trend, but wrong at both ends.

Market Commentary January 2021

We wish all our clients and readers a very Happy New Year. 2020 was a remarkable year, by any stretch of the imagination, and one I am sure we would all like to put behind us. Looking forward to the next 12 months, we are, by our very nature, optimistic. Widespread vaccination programmes are expected to be in place worldwide by June. Unemployment should drift downwards as many, though not all, workers are called back to work and interest rates are forecast to remain low. Ironically, it is China that will continue to lead global growth. There are risks – global growth could disappoint, and valuations are high, almost predicting perfection. But with a calmer political environment, both in the US following Biden’s victory and the UK following their free trade deal with the EU, we see stock markets returning close to their long-term averages of 8-10% for the year.

Market Commentary December 2020

Even with a stout selloff on the final trading day, November will go into the books as one of the best stock months in decades. Good Novembers often set the stage for good Decembers, and there is reason to believe stocks can carry a bit more strength into their final stretch in 2020. In years in which the market is positive through 11 months, as it is in 2020, the last of the bearish money managers are forced to capitulate or risk the wrath of their clients. Scrambling for return, these bears-turned-bulls will tend to window-dress clients’ portfolios with the stocks that have worked best all year.

Market Commentary November 2020

The COVID-19 pandemic has achieved another grim milestone with the global number of coronavirus cases exceeding 50 million. US data is troubling, while trends in Europe are flat-out alarming. The new wave of infection worldwide has followed relaxation of lockdowns on restaurants, bars and other gathering spots along with the natural inclination to move indoors as colder weather arrives. Fortunately, fatalities are not fully tracking the rise in new cases. But governments want to get ahead of the curve before it worsens with further lockdowns and tightening restrictions that were eased just months ago. Amid widely disparate commentary from health professionals, Dr Anthony Fauci, one of the US’s top infectious disease doctors, has argued that national lockdowns are not the optimal way to combat the disease. Instead, he argues that citizens should maintain proven public-health measures such as masking and social distancing “to help us safely get to where we want to go.” With the devastating effect lockdowns have had on the economy, we could
not agree more.

Market Commentary October 2020

The financial pain of the pandemic has mainly focused on those least able to afford it – low-wage workers in people-facing industries, such as restaurant workers, airline employees and physical trainers. Knowledge workers, who have been able to continue working from home, have been less affected by the shutdown. Indeed, this group of workers has benefited – not from higher wages, but from sharply reduced costs. Without being able to spend their salaries, their saving rates have rocketed. Increasingly, reporters have adopted the term “K-shaped recovery” to describe this disparate experience of those at the top and bottom of the economy. The structure of the letter ‘K’ lends itself to this analogy, as the fortunes of those on the upward thrusting arm of the letter diverge from those on the downward-sloping leg. It is certainly a more apt analogy than that provided by, say, a V-shaped recovery, with its assumption that we are all in this together. Given that the stock market is experiencing its worst case of indigestion since March, the message is simple: the economy – and by extension the stock market – cannot flourish if a large segment of the population is left behind.