Karriere  |   Kontakt  
 
 
 
Benutzer
Passwort
Passwort vergessen  
Registrieren
 
A 17-year bear market is over Feb 2017
The next two to three years could be the best time in decades to be invested in the UK stockmarket. Expect the FTSE 100 to smash through 8,000 – maybe even run on to 10,000.

That’s the argument Eoin Treacy put forward in a private conversation with staff here at Southbank Investment Research last week.

It’s a claim that Akhil Patel, editor of Cycles, Trends and Forecasts, has also made in recent weeks. Eoin and Akhil have different ways of investing and analysing the markets. So how have they both come to the same conclusion?

For Eoin – who trades the markets using behavioural psychology as a tool to shape his thinking – it all comes down to a simple fact. The FTSE 100 has been “range bound” for 17 years. It broke out of that range at the end of January.

That’s a significant and extremely bullish signal. Why?

To explain, take a look at this chart of the price action in the FTSE 100 over the past two decades.


You can see the market has traded in a range between 3,500 and 7,000. That’s a big, long-term range. But essentially it means that if you’d bought 17 years ago, you’ve not really made a lot. You could have traded the ups and downs. But we haven’t seen a really big, powerful trend taking the markets above previous all-time highs since the 1990s.

If you’re interested in investor psychology, as Eoin is, that’s an important point to remember. In a range like this, where the market bounces between two levels without making any real progress, people become bored and frustrated.

It’s easy to understand why. Ranges are boring. Trends – a strong up or down move – are much more interesting. And markets can only ever be ranging or trending.

Put another way, an extremely long-term range is a bear market in expectations. I don’t mean people expect the market to drop. They stop expecting anything. 

They have an incentive to sell near the top of the range and buy near the bottom, because the market has conditioned them to think in that narrow band. And if you’re a private investor on the sidelines with money to deploy, there’s no urgent reason to jump into the market.

What Eoin is interested in is when a market suddenly shifts from a range to a trend. That’s called a breakout. It takes a powerful psychological trigger to do so – in this case it’s been the lower pound firing up foreign earnings for UK-based firms.

But once it happens and sentiment shifts… the market can explode higher much faster than anyone realises. The FTSE 100 has broken out of its range. The deadlock has been broken. We’ve now moved to a trending phase.

According to Eoin, that engenders a very different psychological response. We’re moving into a period where you’ll see new “all-time highs” reported on the news at an increasing rate. That news flow feeds off itself as it attracts more money into the market, driving it even higher.

It’s a classic “breakout” scenario. And it’s one I know Eoin is already sizing up for entry points. More on that when I get it.

 
 
Oct 2017
German fund inflows for 2017 already ahead of last year
Oct 2017
Zinc is dull but useful, and it’s in short supply – it’s time to buy!
Mar 2017
Confidence among European and global fund managers is increasing, with many seeing European equities as undervalued as the macro landscape improves.
Feb 2017
A 17-year bear market is over. The next two to three years could be the best time in decades to be invested in the UK stockmarket. Expect the FTSE 100 to smash through 8,000 - maybe even run on to 10,000.
 
   Haftungsauschluss © 2010 Questor Capital. Alle Rechte vorbehalten  
Questor Capital Ltd. has offices in Malaysia, Singapore and Thailand and is regulated in Malaysia by Labuan FSA (License Number BS200649).
Thailand group management office (License Number 1755201886).