In these days of an unsettled, unpredictable global economy, it has become increasingly difficult to find Alpha: the active return on an investment. Central bank interest rates (generally the underlying allegedly ‘risk-free’ rates in a given currency, from which all other returns are ultimately derived) are incredibly low (if not negative) and commodities prices have dropped through the floor over the last two and a half years. Added to that, stock prices are very expensive – as illustrated by the S&P 500.
Being an independent investment advisor is about finding the most appropriate solutions to the highly individual challenges created by each client’s unique situation. That may not be the most controversial statement you read today, but it is as important a concept as it is simple.
Donald Trump’s victory in the US presidential elections may appear seismic. But what of the aftershocks over the next few years?
For the investor, this is confusing. Is the oil market– and the companies which extract and distribute it - worth buying into as it bottoms out, promising and decent returns ahead? Or are these stubbornly low prices a new normal, offering little future margin? Away from direct investment, what effect does such confusion have on other markets?