Forget quantitative easing – the policy measure for which central bankers should be reaching in the current climate is Cadbury’s Caramel. So another column, another random cultural reference – this time, the 1980s advertisement where a cartoon rabbit with a languorous West Country drawl advises assorted frenetic woodland creatures to ‘take it easy’ and eat some chewy chocolate.
I have never been a fan of this particular sweet myself but, with global investors apparently preferring to go with the market wisdom of Chicken Little rather than, say, Ben Graham, it certainly feels as if the world’s trading floors could do with channelling some of the spirit of the Caramel Bunny. By the time you read this, I suppose it is always possible they will have.
As I type, though, the prevailing spirit is best epitomised by RBS’s already-infamous ‘sell everything’ jeremiad, which warned how barn doors can quickly shrink to cat-flaps when everybody is running for the exit (not least, one presumes, in response to ‘sell everything’ notes from large banks – even ones that demonstrated their prescience ahead of the 2008 crisis with a bailout-inducing bid for a rival).
It is easy to mock – fun too – but the serious point about cataclysmic investments pronouncements is they serve to fuel market volatility while apparently taking little account of the longer term. Are investors not being constantly instructed that equities, for example, should be bought with a time horizon of at least five years? So why make this kind of sweeping short-term recommendation?
It is not as if markets ever need extra encouragement to act irrationally so, rather than adding to the general panic, is this not a time to ‘be more Bunny’? Take some time to step back and think very hard about what is happening here. Heaven forfend, the doom-mongers may be right – stopped clocks and all that – but is there no alternative to the Armageddon scenario?
Sure there is – and, as you might imagine, versions of it are being gently voiced by those contrarian souls from the value and behavioural finance communities. Take, for instance, M&G Episode Income fund manager Steven Andrew, whose observations include: “If we are sticking to the facts, this sell-off is way overdone.”
He also notes “When commentary is ignoring good data and overemphasising the negative, it should serve to embolden those who see opportunity in recent price falls.” That – not to mention my talk of Chicken Little and Armageddon – puts me in mind of something Seven Investment Management’s Justin Urquhart Stewart told me during the very darkest days of the credit crunch.
It has been at least two years since I last mentioned it in this space so I will happily roll it out again: “You have to take a view. Do you think things are going to be better or worse in 10 years’ time? If you think ‘worse’, buy a case of scotch and a shotgun and go pick out your cave in Wales. If you think ‘better’, you should be looking to invest.”
Julian Marr is editorial director of Adviser-Hub
