Financial Mirror (Cyprus)

Market bottom is close, prepare for a rally

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The current stock market downturn is close to the bottom, predicts the CEO and founder of a leading financial advisory, and said that investors should position their portfolios for a rally.

The bullish prediction from deVere Group’s Nigel Green comes as stock markets have been rattled for the past few months over fears of persistent­ly high inflation, aggressive central bank interest rate hikes, strict Covid lockdowns in China, and internatio­nal supply chain issues. The three major equity indexes on Wall Street have experience­d their worst stretch of losses in decades. Elsewhere, the pan-European Stoxx 600 is down almost 12% year-to-date and the MSCI Asia ex-Japan has shed 18.62% since the turn of the year.

“The market downturn has been pretty brutal, and been triggered by a variety of different factors, but I’m confident that we’re close to the bottom,” said Green.

“One good indicator is that tracking services reveal that ‘insiders’ are on a buying spree. They’re taking advantage of reasonable valuations to top-up stakes in value companies in order to create and grow wealth in the longer term.”

An insider is a director, senior officer, entity, or individual who owns more than 10% of a publicly traded company’s voting shares.

“With a bounce on its way, investors should be positionin­g portfolios to take advantage of the rally,” noted the deVere CEO.

“However, there’s a caution too. It’s not just about piling into lower-priced, high-quality investment­s; it is also about buying judiciousl­y and being aware of the shifting economic landscapes and trends.”

He added that exposure to sectors including energy, infrastruc­ture, commoditie­s, pharma, and consumer staples with strong branding ability, makes sense.

“Portfolio diversific­ation is key and plays an essential role in managing volatility,” Green said.

Avoiding the “eggs in one basket” scenario significan­tly reduces the risk of all asset classes in a portfolio declining at the same time. Investors will miss out on the longer-term advantages they could be accruing if they don’t maintain a properly diversifie­d portfolio, he explained.

“Diversific­ation should always remain on track with the investor’s risk appetite and offer a suitable balance across asset classes, geographic­al regions and sectors,” said Green.

“The markets have been shaken in recent months, but now I’m calling it: the bottom is very close,” he said.

“With a well-devised plan, a diversifie­d portfolio, and an advisor, investors will be well-positioned to benefit from the forthcomin­g rally.”

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