The past 12 months have seen some very positive movements of global stock markets and these were extended into the New Year as the US narrowly avoided their ‘fiscal cliff’.
Almost all global indices have risen as hopes are kindled that politicians will come together and focus on the welfare of their respective economies.
But there are a number of reservations and caution should balance the optimism.
The issues which have caused so much turmoil in recent years remain and although economic leaders allow time to pass, the key points remain:
- The US has not removed the ‘fiscal cliff’, rather they have deferred many of the tax rises just a couple of months down the road.
- Europe has yet to demonstrate greater cohesion and show how the debt crisis can be handled long term.
- The UK continues to struggle with its own debt burden and lack of economic growth.
So why are the markets so positive? Even if they fall back slightly they believe the economic conditions are right for growth and/or profits in some form, especially when looking longer term.
There is a long way to go but there are reasons to be upbeat and bullish. There are no quick solutions to global financial woes but there are signs of recovery and given time, these will filter through to individual investment portfolios. As always, focusing long term will ensure the best returns.
In the meantime we continue to suggest clients probably lessen their exposure to government debt (Gilts) and maintain their focus on Corporate Bonds and Equities, both in the UK and globally.
As always get in touch if you are concerned with any financial matter or just want to chat about your pensions or investments.