Investment Strategies

Don't Panic! Rothschild's Investment Chief Says Market Worries Must Be Balanced By Underlying Good News

Tom Burroughes Group Editor London 15 July 2015

Don't Panic! Rothschild's Investment Chief Says Market Worries Must Be Balanced By Underlying Good News

A very human tendency to emphasise negative news and ignore positive developments can lead investors astray as much as exaggerated optimism can do, Rothschild's investment strategy chief says.

While there are market gyrations in China, Greek debt wrangles and other events to shake investors’ nerves, pessimism needs to be balanced by understanding that in general, global living standards have never been so good, according to the man setting strategy for one of the world’s most renowned private banks.

Kevin Gardiner, chief investment strategist of Rothschild Wealth Management – and who is shortly to publish a book about his own views – told journalists that some recent worries around China, Greece, the US economy and potential UK exit from the European Union are overstated and can cloud investors' judgement if not put into a larger context.

In recent weeks, markets have faced the prospect of Greece leaving the eurozone – possibly averted for the time being – a slump by around a third in Chinese mainland shares and some soft US economic numbers.

“We can overstate some of the things that concern us,” Gardiner, speaking at the firm’s offices in the City of London, said. 

Gardiner’s new book, Making Sense of Markets, focuses on how people often exaggerate the negative news as far as long-term investment views are concerned and also argues that underlying living standards have improved markedly since for much of the past half-century. His book highlights how people are unjustifiably concerned about issues such as debt and ageing populations.

Turning to the more immediate concerns around Greece and last weekend’s debt deal between the country and other eurozone members, Gardiner said Rothschild’s investment views were not based on any particular outcome because the participants themselves were unclear what will happen.

“Whatever happens, even if there were to be a `Grexit’, the system generally is strong enough… terms of the big picture we will continue to muddle through.” “The balance of risks is some sort of `muddle-through’ scenario,” he continued. Eurozone countries have concluded that Greece has more to lose than gain by exiting the single currency bloc, he said.

One outcome worth noting, he said, is that actual lack of market volatility in recent weeks around the Greek debt wrangle.

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