Survey data out of both the US and UK in recent months has confounded perceived wisdom
because despite significant political upheaval in these countries last year, confidence has improved.
This is something of a surprise because such substantial changes may be considered a destabilisation risk given the relative fragility of confidence following the global financial crisis. Indeed, only twelve months ago the market would seemingly fall regardless of news flow as a combination of weak resource prices, concerns over China and now long forgotten whispers about the end of the credit cycle provided a negative background that was difficult to overlook.
To paraphrase Charles Mackay, author of Extraordinary Popular Delusions and the Madness of Crowds (first published in 1841) market participants were gripped by fear and in that condition investors saw risk even in enticing opportunities.
James Klempster (CFA), Head of Portfolio Management for Momentum Global Investment Management shares his view. Click here to view.