Investors are in an unusual position right now. Concerns abound about everything from politics to war to the health of major economies, but the global stock market is on the rise.
However, dig a little deeper and there are also concerns as returns become increasingly concentrated in the dominant Magnificent Seven of the US stock market.
“There are a lot of risks, but at the same time, if things look risky, that usually creates opportunities,” says Tom Becket, co-chief investment officer at Cannacord Wealth.
He joins This is Money’s Simon Lambert on the Investing Show to explain how he builds portfolios to protect investors against risks and help them take advantage of those opportunities.
Becket says that while investors are right to be cautious, they also run the risk of being too pessimistic and that, apart from some highly valued market sectors, share prices largely look attractive.
He says investors should also look at bonds now that interest rates have returned to more normal levels.
He says: “Everyone says you have a long-term time horizon, that you should only own stocks.” That’s an opinion, but I think at this point you could probably get similar returns on fixed interest as you do on stocks.”
Becket also explains what the job of an investment director entails and what he thinks investors should consider about their own portfolios, ambitions and profitability.
He says: ‘Ultimately, I think the best arbiter of investment success is inflation. If it generates an inflation-beating return, that should be the ultimate guide to investment success.
‘It’s about the concept of generating real returns. I would suggest that would be the starting point for anyone thinking about investing for the future.’