According to my copy of this week's Fund Strategy magazine, investors' appetite for risk has reached the highest level in six years, as economic indicators start to turn positive and markets rally. The source of the data is Merrill Lynch, a fund management company, so we must take its findings with the proverbial pinch of salt, given their vested interest.
They also found that only 8% of investors expect a double-dip recession i.e. where the market recovers a bit before falling back down again and eventually recovering some time later (think of a 'W' shaped graph as opposed to a 'V' shaped one).
Well, I'm afraid that I'm firmly in with the 8%. I also, no offence, have no faith in the average investor 'calling' the market. I've been doing this job for too long not to have seen many 'bubbles' driven by people jumping on topical bandwagons, for example, technology shares, just before they crashed.
So, for what it's worth, my personal view is that we will see a market correction i.e. fall, probably a sizeable one, in the Autumn. I think that the outlook for both property prices and UK equities is bad in 2010, given that the new UK government is going to have to cut public spending by huge amounts, putting a lot more people out of work.
So the key to successful investment in the next few years is, as ever, having a diversified portfolio, reviewed regularly and using pragmatic fund managers who can see through the hype generated by their own marketing departments!
