What’s in a number?
Citing a report which outlines how global equities have produced returns of 60% since January 1998, Greetham explained that the even numbered years actually posted returns of -35%, while the odd-numbered years posted returns of 140%. This is due to the fact that the global inventory cycle is roughly two years long, and he expects 2011 to follow in that pattern. “And that will lead us up to the end of an even-numbered year.”
Greetham is bullish on equities as the end of the year approaches, particularly as talk of a double dip recession grows. As for what advice he has for clients, he sticks to the basics, counseling diversification, including bonds and commodities exposure alongside equities.
“Don’t try and reduce risk by timing your equity portfolio,” he said. “As a tactical asset allocator, yes I have to time markets. But the bulk of returns that my investors will see are because they have five asset classes in their portfolio at all times, and my deviations are pretty controlled.”
And if you have friends in China, it might be worth a phone call to ask them how they were feeling four months ago.