Investors could be hit by uneven global stock markets, warns the CEO of one of the world’s largest independent financial advisory organizations.
Global Stock Markets Extend Their Rallies
The warning from Nigel Green, chief executive and founder of deVere comes as stock markets around the world extend their remarkable rallies despite a continuing global public health emergency, economic downturns and financial upheaval, political uncertainty and widespread social unrest.
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
Wall Street is expected to open higher again on Tuesday – with the benchmark S&P 500 less than 10 per cent from its all-time high.
In the Asia-Pacific region and across Europe, all major indices made gains.
Mr Green notes: “Global markets are continuing to rally. This is extraordinary as tensions between the U.S. and China – the world’s two largest economies – are heightened, when the President of the U.S. is threatening to deploy the U.S. army onto the streets of America, and as the global economy attempts to recover due to an ongoing pandemic for which there is still no cure, to name a few of the current factors causing chaos.
“All of this would normally send the markets into tailspin. Yet this time they continue to rally.
“But a closer look at the markets shows the upswing is being fuelled by a handful of companies that reflect the ‘new world’, which is increasingly tech-driven.”
He continues: “This is concerning as some investors could potentially take a significant hit.
Risk From Uneven Markets
“Investors who buy an exchange-traded fund, or ETF, which are investment funds traded on stock exchanges, could be particularly at risk from uneven markets.
“In these highly unusual times, ETFs are the wrong place to invest right now.”
Actively managed funds, says Mr Green, can be “expected to outperform in 2020 and beyond.”
He says: “The world has been ‘reset’ and as it readjusts, we will see new industries, new trends and new highly successful companies emerge – and probably quicker than many might expect.
“To fully capitalize on the major opportunities of this new era, and to mitigate the risks of considerable market imbalance, investors should ‘think active’ to be in the right stock.”
The deVere CEO concludes: “In the current climate, actively managed funds are likely to best position investors to navigate the new world.”
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.