Investment Clock insights

Investor sentiment is euphoric

Trevor Greetham

25 July 2016

Our composite investor sentiment indicator has reached its most euphoric reading in 18 months after global equities responded to expectations of easier policy as a result of the UK's ‘Brexit’ vote.

We believe it is generally a good idea to buy shares when others are panicking and to sell shares when they can see no wrong.

Rather than selling, we would use dips to increase exposure to parts of the world unaffected by Brexit. We see near-term risks linked to political developments in Europe (Brexit, Italian referendum) and the US (Trump) and potential shocks out of China (devaluation) and the US (rate hikes). However, with global growth strong and policy staying loose, we believe the longer-term outlook for shares is good.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.