Markets, lakes and gridlocks

I recently decided to take a trip up to the Lake District thinking that some down-time by the Lakes would be a good idea. The only problem was, everyone had the same thought as me, so the M6 on the way up resembled a car park - it took over seven hours to get there!

As I whiled away the hours, staring at the back of a white van, I realised that my unique idea to get away for the weekend wasn’t such an exclusive decision after all. As the traffic continued to back up, it dawned on me that the markets are also displaying a similar herd like mentality. 

Investors’ focus is swinging from one area of the market to another and there’s a sudden expectation to become an expert on one very niche macro factor or statistic.

US non-farm payrolls are back in focus, as everyone tries to get a steer on whether the US economy is flat lining or growing strongly. This, of course, is key to Federal Reserve chair Janet Yellen’s next utterance. No-one seems to care that these figures are often significantly revised later.

The excitement around these numbers can often reach fever pitch, especially on our desk where we have a monthly sweepstake. Yes, I have never guessed correctly, so there is some bitterness here as well.

The China Services PMI came in at 51.2, falling sharply when the wonks had expected it to rise. However, this appears to have been largely ignored by investors. Over the past couple of years any evidence of a potential ‘soft landing’ would have caused a furore in global markets. But now it’s out of fashion.

Remember Greece? We only focus on the embattled Mediterranean nation about once every two years. And when we do, its importance drives movement in asset prices that dwarf its miniscule GDP and trade clout. The oil price was massively important a few weeks ago and everyone’s view was being canvassed. A colleague was looking at the Baltic Dry Index last week. Eight years ago, everyone was watching this red-hot metric, as it was seen as a key leading indicator. I haven’t heard it being mentioned for years, after it fell from favour.

Information is pivotal to what we do, and these measures, along with all the others, are crucial to determine the state of the world and potential investments. However, I think investors are increasingly being railroaded into looking at the same things with the same fears and the same eyes.

 More than ever, a contrarian standpoint is needed. Not just for the sake of being different, but to make sure clients aren’t caught in the investment equivalent of a traffic jam near Blackpool.

Important legal information

This area of the site is for professional advisers

Please read this page before proceeding, it explains certain legal and regulatory restrictions applicable to the distribution of this information. It is your responsibility to inform yourselves of and to observe all applicable laws and regulations of the relevant jurisdiction.

This section of the website is directed only at investment advisers and other financial intermediaries who are authorised and regulated by the Financial Conduct Authority (FCA).

The information provided in this site is directed at UK investment advisers only and must not be circulated to private clients or to the general public. It does not constitute an offer to sell, or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorised or in which a member of the Rathbone Group is not authorised to do so.

I confirm that I am an investment intermediary authorised and regulated by the Financial Conduct Authority. I have read and understood the legal information and risk warnings below:

Important Information (Terms and Conditions)

The information contained on this site is believed to be accurate at the date of publication but no warranty of accuracy is given and the information is subject to change without notice. Any opinions or estimates included herein constitute a judgement as of the date of publication and are subject to change without notice. Furthermore, no responsibility is accepted for the accuracy of any information contained within sites provided by third parties that may have links to or from our pages.

Rathbone Investment Management Limited ("RIM") is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered Office: Port of Liverpool Building, Pier Head, Liverpool L3 1NW. Registered in England No 01448919.

In accordance with regulations, all electronic communications and telephone calls between Rathbones and its clients are recorded and stored for a minimum period of six months.

The information provided in this site is directed at UK investors only. It does not constitute an offer to sell, or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorised or in which a member of the Rathbone Group is not authorised to do so.

In particular, the information herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in France and the United States of America to or for the benefit of United States persons (being resident in the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof).

In order to comply with money laundering and other regulations, additional documentation for identification purposes may be required.

Rathbones shall have no liability for any data transmission errors such as data loss, damage or alteration of any kind including, but not limited to, any direct, indirect or consequential damage arising out of the use of services provided or referred to in this website.

Past performance should not be seen as an indication of future performance.

The value of investments and the income from them can fall as well as rise and you may not get back the amount originally invested, particularly if your client does not continue with the investment over the longer term.

Changes in the rate of exchange between currencies may cause the value of an investment to go up or down.

Interest rate fluctuations are likely to affect the capital value of investments within bond funds. When long term interest rates rise the capital value of units is likely to fall and vice versa. The effect will be more apparent on funds that invest significantly in long dated securities. The value of capital and income will fluctuate as interest rates and credit ratings of the issuing companies change.

Tax levels and reliefs are those currently applicable and may change and the value of any tax advantage will depend on individual circumstances.

Investing in emerging markets or small companies may be potentially volatile, as these investments are high risk.

The design, text and images are owned, except as expressly stated by members of the Rathbone Group. They may not be copied, transmitted, displayed, performed, distributed, licensed, altered, framed, stored or otherwise used in whole or in part or in any manner without the written consent of Rathbones except to the extent permitted and under the procedures specified in the copyright Designs and Patents Act 1988, as amended and then only with notices of Rathbones' rights.

Rate this page:
No votes yet

We’d love to hear your feedback

Please help us improve and shape our future services and products by taking a short survey.