Bill Jamieson: Famous five have markets mystery to solve

The audience may not get all the answers to the mysteries of what lies ahead in 2013. But knowing the speakers as I do, the evening will be a treat. After a highly successful event last year, the conference will assess the forces now driving markets and the prospects for recovery in 2013.

Top speakers include Sebastian Lyon, investment adviser to Personal Assets Trust; Katherine Garrett-Cox, chief executive of the giant Alliance Trust; Mark Connolly from Scottish Widows Investment Partnership; Alan Porter, manager of Martin Currie’s Securities Trust of Scotland, and Jim Wood-Smith, chief investment strategist at Investec Wealth & Investment.

Together, they represent investment houses with funds under management totalling more than £500 billion.

The event will be introduced by Owen Kelly, chief executive of Scottish Financial Enterprise, and I will be in the chair to make sure no-one throws any furniture.

Will America see a sustained recovery? What is the outlook for fixed interest markets? Will we see an end to the eurozone crisis? Above all, what are the sectors to be invested in – and which ones should we avoid?

I had the pleasure of seeing Mr Wood-Smith in action last week in Edinburgh with such a striking, counter-intuitive presentation that the event left me in no doubt that 20 November is set to be a cracker.

He was speaking to a gathering of Investec/Williams de Broe investors after yet another of those sudden “risk-off” days in markets when gains painstakingly built over several weeks disappeared in a trice.

You certainly don’t have to look hard to find reasons for staying out of stock markets today. Five years on from the eruption of the global financial crisis and we are still struggling with its consequences. Bank loan books remain in a terrible state. Household finances are perilous. The eurozone still looks like a blind walk along a cliff-edge. Few believe last week’s figures showing our exit from recession herald better times. The crisis. Ah, yes, the debt and deficit crisis. The banking crisis. We’re still in it up to our eyeballs. How can we dare hope to move on?

Mr Wood-Smith was having none of this. We have in fact moved on from “the crisis” and its defining moment in 2008 with the collapse of Lehman Brothers and in early 2009 with the effective nationalisations of Lloyds Banking Group and RBS in early 2009. On 9 March, the US Standard & Poor’s hit a satanic intra-day low of 666.

Few imagined there would be much by way of recovery back then. But last week the S&P was up at 1,415. In fact, while we obsessed with volatility, risk, absolute return funds and the tumbling return on gilt edged stocks, global equity markets have rallied by 70 per cent where they have not doubled. The S&P is up 116 per cent, the German DAX by 101 per cent, the FTSE All Share by 72 per cent.

“This entire obsession over safety,” says Mr Wood-Smith, “should have applied in the earlier period. Markets since the crisis have been quietly getting on with it.”

All very well, you may say, but what’s it got to do with the real world? But here, too, he points out, we have moved from crisis. The table shows how the major world economies have in fact grown since 2007, one notable exception, of course, being the UK. The table also highlights why Mr Wood-Smith loses no sleep over Greece, its economy being smaller in magnitude than the margin of error for China’s growth performance.

So, not only have global equity markets been good, but the performance of many leading global economies has been better than generally admitted. As for the future, he does not deny we are in for some further turbulence but is markedly more upbeat than most commentators. The global bull market will continue, helped by the unparalleled determination of central banks to stimulate growth, increasing pressure for relaxation of banking regulation to stimulate bank lending, and early signs here in the UK that the Funding for Lending Scheme may already be having a benign effect. Now, this was a counter-intuitive presentation. And I can vouch for the fact that the views of other panelists are likely to be in sharp contrast.

Mr Lyon, for example, is an eloquent and compelling advocate of investment for capital protection. “Safety first” is set to remain the preferred position for investors – and it is a stance that has certainly served Personal Assets Trust and the Troy funds and trusts very well in recent years.

Where to from Here? begins with registration and buffet at 6:30pm. After the presentations there will be a question and answer session followed by another networking opportunity. For more information, visit Scotsmanconferences.com, e-mail [email protected] or call on: 0131 620-8656.

This will be an invigorating and enlightening event. I look forward to seeing you.