generally made up of several short terms. Since we expect to make the most of the short terms for our clients, the longer term will look after itself. 8 You can sense the optimism building. Stronger data indicating growth resuming in the UK, rising house prices, better retail sales and a good summer are all coming to the aid of the recovery. However, these headlines could very well have been said in 2006, just prior to the onslaught of the financial crisis. The thought that we need to re-balance our Economy has been pushed aside. A bit more of the same that appeared to work well in the past is clearly what we need now. It would be churlish to complain, but it does serve to highlight that our recovery from this episode is far from established at this stage. We remain too imbalanced, and confidence fragile. And the necessary adjustments that are taking place still feel as if they have some way to run before our competitiveness leads to a more balanced outcome for our Economy. The positives out of the above assump-tions are that inter-est rates and other mechanism of Eco-nomic Stimulation will have to remain in place for longer, years if not months. And whilst that news is not very good for savers look for a decent low risk return, and it is not good for the Government which will continue to struggle to balance the books and reduce the deficit, it is not a bad environment for business. Stabilised revenues, and greater control over costs (technology, lack of wage inflation etc) means that profits and cash flows are more predictable, and it is that that investors I believe will con-tinue to pay higher prices for through Price Earnings ratios. Paul Kavanagh, Partner and Senior Market Strategist Welcome to ‘Through the Looking Glass World’ where virtually nothing is what it seems. The fact that the Central Banks in several major economies have had to intervene to avoid total meltdown after the Financial Crisis that began in late-2007 is a great distortion of how the global economy would normally operate. Throw in a raft of unintended consequences and the challenges facing investors and their advisers to make sense of it all are enormous. Part of the backdrop to equity and bond markets in the next six months will be how the U.S. Federal Reserve will wean investors from low interest rates without inducing the sort of dramatic drop in bond markets that occurred in 1994 under similar circumstances. Already, just the hint of tapered Quantitative Easing and the end of easy money has unsettled markets around the world. Currently, the main dynamic tension exists between the rates of economic growth, interest rates and the levels of support from Central Banks. The best we can hope for is smooth transi-tional adjustments. In the face of such a complex scenario, Beaufort attempts to keep things as simple as possible. Whilst keeping a firm grip on the fundamental developments as they evolve, we favour using a technical ‘bottom-up’ approach to identify potential invest-ments and to provide a guide to investment timing with a view to ending up with ‘the right investments at the right time’. How markets move in the coming months will depend on a raft of variables including perennial questions such as ‘have the problems in the Eurozone really been resolved ?’, the answer to which may not truly emerge until after the German elections in September. The longer term is Mike Franklin Chartered FCSI , Head, Investment Strategy Are you developing your Staff? Training and the development of your staff is one of the most important investments your organisation will make. Goodacre UK offers a comprehensive and effective training service designed to meet the compli-ance, HR, marketing and operational needs of your firm. Our training courses cover a range of subjects of rel-evance to the investment industry, from Introductory sessions through to detailed learning programmes. For a full list of our forthcoming training, please visit goodacreuk.com, call +44 (0)20 7422 0063 or email email@example.com.
GOODNEWS July 2013
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