Investors should expect more volatility in the markets this year, according to star stockbroker Justin Urquhart Stewart of Seven Investment Management (7IM).
Mr Urquhart Stewart believes 2017 was very much a year of complacency and low volatility and questions whether it can continue this year: “We know for well we're going to see, probably rising rates in the States… Brexit having more of an impact, and you'll see some tax changes just going through Congress in the States.”
He adds: “Remember, we have been in a period of high equities, high bond prices and very little volatility. That will change. Therefore, investors must be looking for other asset classes to try to give them something which isn't connected or correlated to those. That could be commodities, it could be currencies and all those elements which give some defence against that volatility. It will come at some stage.”
One of the key signals of a change in market conditions is increased volatility, according to investment firm AJ Bell.
However Mr Urquhart Stewart is quite bullish on the idea of an increase in volatility and believes “exciting dips” could provide an opportunity to buy undervalued stocks at cheap prices. He says: “In many ways, I hope we're going to see some volatility. Because we've had virtually nothing. It's been about as exciting as going downhill skiing in Norfolk!
“As I said before, I don't know what's going to trigger it. This volatility may not necessarily mean markets move forwards very much, but dips would provide opportunity so long as you like the underlying value of those asset classes.
“So, yes, I think there could be some exciting dips which, for the courageous, no, more for the good planners, to take advantage of those. Because I think the global economy is in better shape, just give me a bit of a discount and I'll buy it.”
Watch the full interview with Mr Urquhart Stewart below: