AMP Capital’s Head of Dynamic Asset Allocation Nader Naeimi examines the opportunities in investing in equities in a time of economic weakness and political uncertainty and what really are the prospects for strong market returns. Key points:
- The political backdrop has become a significant contributor to short-term market volatility, but the increased volatility is creating enormous opportunities for investors with times horizons beyond the very short-term.
- While it makes sense to expect poor returns from equities and other growth assets given the ominous macro backdrop, the fact that the challenges to growth are so widely known should provide little guidance to future returns.
- The increased scrutiny of macro and political dynamics is providing fuel to the emotional and reactive investment decision making. The silver lining is that volatility and the herd behaviour is creating significant profit opportunities for those who are willing to accept short-term volatility and stay objective in making investment calls.
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