Over the past year, markets have seen a sea change. Gone are the days of hopeful talk of “global synchronised growth” and the continuation of the bull market; instead, there has been a return to volatility and growing fears of difficult times ahead. In the face of such bearish sentiment, should nervous investors think about returning their portfolios towards more defensive investments? The answer to that question depends to some extent on your timescale.
With so many political and economic worries confronting world stockmarkets, and rising interest rates threatening bonds as well as equities, it is hard to know where to turn.
There has been a marked decline in investor bullishness over the past few months. The US market roared ahead, but global indices from Europe to Asia Pacific have stumbled. Growth has been slower and economic indicators across continents have been disappointing.
If history is any guide, we may be nearing the end of a strong run in stock and bond markets. At more than 3,450 days, the bull market run in equities is already the longest in history and bond markets have started to roll over. There are sound reasons for this: interest rates are rising, valuations are high and the geopolitical environment is increasingly uncertain.
We consider gold and other diversifiers you might want to use as safe haven assets