Market Commentary - Autumn 2009 - 2009-09-30



The rally in stock markets that started in the spring continued to gather momentum throughout the third quarter. In fact many different global markets posted record returns for the quarter, such was the strength of the rises witnessed during the period. The strength and speed of this rally initially caught many investors on the hoof, however such a rebound is not overly surprising given the depths that had been reached at the post-Lehmann Brothers nadir from where this rally began. Investors have driven back the prices of oversold shares to more realistic levels given where we are in the economic cycle.

As ever, the question for investors is “Where next?” for global markets, and this conundrum potentially offers more questions than answers. Whilst the recent rallies have brought markets to more realistic levels, we are some way still from previous highs seen before the “credit crunch” crisis. However, many realise that the world will not return quickly to the type of outright growth period that was previously seen, as economies will be paying back the cost of the crisis for some time. Unemployment continues to rise and there is concern that it could stay at high levels as businesses remain uncertain about the strength of the recovery. Similarly, governments are soon to be faced with difficult decisions as how to pay back the support they have offered to economies and therefore spending cuts and changes to fiscal policy are expected and will need to be carefully managed.

In this environment we are convinced that clients will benefit from an active fund management approach. The ability to select funds and investments which can outperform markets will be crucial as underlying economic growth may be more anaemic for some time. We continue to recommend trusted, established and proven managers for our clients’ portfolios as we feel they will have the experience to manage and deliver returns in this challenging environment.

Opinions expressed represent the views of Stan Gaskin Ltd at the time of writing, They are subject to change and should not be interpreted as specific advice. Please discuss your personal circumstances with an adviser prior to making any investment decision.