Is it time to invest that cash pile in stocks?
21st January 2019 12:04
by Douglas Chadwick from interactive investor
This content is provided by Saltydog Investor. It is a third-party supplier and not part of interactive investor. It is provided for information only and does not constitute a personal recommendation.
It's early days for this rally, but the Saltydog analyst is mulling a return to equity markets this week.
FTSE 100 rises amid political turmoil
Even though last week the government suffered its biggest defeat in modern history, and then faced a vote of no confidence, stockmarkets have remained relatively stable. Most pundits also expected sterling to weaken, and it's actually strengthened a little.
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It's often said that what investors like the least is uncertainty. Although last week's Brexit vote was important, the result wasn't unexpected and that's probably why we haven't seen a more dramatic reaction. Likewise, no one really expected the government to lose the confidence of the house and in the end it didn't.
Over the week the FTSE 100 index gained 0.7% and is now up 3.6% so far this year. The FTSE 250, which tracks the performance of smaller UK companies, went up by 1.2% last week and has gained 7.2% since the beginning of the year - that's quite some going.
We noticed this upturn in the fortune of the UK companies in the sector analysis that we looked at last week. At Saltydog Investor we track the average performance of the top 50% of funds in each sector on a weekly basis. Our analysis last week showed that both the UK All Companies and UK Smaller Companies sectors had gone up by 4.8% in the previous week.
I'm not expecting such a strong performance for last week, but there's definitely been a shift in momentum since the beginning of the year.
Here are some of the leading funds based on their performance over the last four weeks:
Data source: Morningstar
They've gone up by between 5.0% and 8.2% in four weeks, and yet are nearly all down over 12 weeks and have lost between 10.7% and 18.1% in the last 26 weeks.
So far, they've only had two really good weeks and so it's early days, but if this trend continues they've still got quite a way to go just to get back to the valuations that we saw six months ago. We didn't invest last week but were tempted and will be reconsidering again this week.
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These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.