Stay Invested – “To begin is easy, to persist is art” (European proverb)

Now that we are all back from our Summer Holidays, and the leaves have started to turn yellow, some investors will be looking again at whether to invest in stock markets. Good news is not hard to come by at the moment, as the pace of interest rate rises in America looks likely to be slow over the coming year and Europe continues to enjoy renewed economic confidence and growth.

In recent weeks Portuguese bonds enjoyed their strongest rally in over 5 years as one credit agency upgraded their rating back up to Investment Grade. Meanwhile in France Macron is steadily winning over market strategists with his plans for labour reforms and profit estimates from most European companies have generally met expectations. Perhaps of equal importance is the growing view that Draghi may even announce further Quantitative Easing (QE) if the Euro continues to rise –although FX speculators have chosen to ignore this warning.

However, investor psychology plays a huge part in financial markets and despite the slew of good news, a rebound in economic growth and a benign political outlook in Europe, some investors are still quite wary of equity markets. This is of course understandable given the fact that the Great Financial Crash of 2007/8 is still very much fresh in people’s minds. However, in our view, if you wish to make a decent return, it pays to do two things.

Firstly, investors should try to stay invested for extended periods of time. This is easier said than done when we live in a world where many investors prefer to simply sell a holding when it has delivered their desired return in a short space of time. However, we have noticed that some of our best returns come from groups which have consistently met our expectations.

Secondly, passion is an often overused word in the media these days, but occasionally we see real vision and determination from Management teams over many years. Such traits and solid track records are hard to come by, as many CEO’s change companies every 3-4 years. By way of contrast, the CEO who has started his company from scratch, works long hours and has built a strong team around him is normally worth reviewing.

Elsewhere, in Britain the Conservative party seem to have entered into their traditional Autumn mode of jockeying for influence over what happens in the Brexit discussions. As several large Banks and employers have yet to formally declare whether their head offices will remain in the UK, over the last 12 months, we have noticed a sharp downward trend of 10-15% in London Residential property prices. As property assets are widely held in the UK, and are a useful indication of how confident the consumer feels, this is of course worrying.

It remains to be seen whether the electorate may eventually request a very soft Brexit or perhaps even another vote on the matter. The latter may surprise some readers, however, there is a growing belief in Britain that insufficient detail on the economic implications of leaving Europe was made available during the TV debates.