Do the buying when everyone is selling off...

I have noticed recently that having spent the best part of 40 years accumulating wealth, I am now at the point when I am told I need to start using it. One financial adviser told me that his job in life was to make sure I left this earth with only a penny to my name. But I am beginning to think I am hard wired to accumulate wealth. Most times when I get asked to help a company, I find a way to do it even through my advisers and doctors tell me that it is time to take my foot off the gas. I can’t get in to the mindset of turning down opportunities.

The same adviser advised me to reduce my expected return from investments. Whilst I understand the theory, I just can’t bring myself to do it.

I am a contrarian investor. I try to see opportunities everywhere. After 9/11 when the markets collapsed and everyone was selling, I saw a buying opportunity. The Brexit vote caused a major correction in sterling so I sold overseas assets and bought shares in UK exporters. At least they now have a competitive advantage for a couple of years until the Europe trade agreement gets sorted.

Mr Nissan in Sunderland is now making 15 per cent more in sterling terms on every car he sells in Europe.The global credit crunch caused long term interest rates to fall so fixed interest securities benefited in the short term. When it looks like time for a rise in interest rates bonds look vulnerable and equities rise. Timing is everything.

Some commentators say equities look high on fundamentals and some say they have further to rise.

It is clear to me is that markets also reflect supply and demand and it is difficult to believe that the demand for bonds in general will outstrip demand for equities in the medium term.

The other key factor behind equities is growth and worldwide growth expectations look reasonable.

Even in the UK, contrary to many commentator’s expectations, growth is holding up pretty well and, in my direct experience, there are a significant number of companies who appear relatively unaffected by Brexit so far. Time to search them out.

I find that, generally in times of uncertainty, equities with a sustainable and reliable dividend stream tend to hold up better.

Looking further afield, whatever you think of Trump and his policies, he will certainly protect US corporates so opportunities should exist for growth in US equities, particularly those with a domestic US focus. As an aside, although inexperienced, our lady in red’s visit to Washington seemed to go pretty well, critical if we are going to rely more on the US for trade after Brexit.

As someone said to me this morning, you can’t influence someone if you are not talking to them.

Looking at the corporate sector, I think capital investment will continue apace, both to improve efficiency, and therefore profits as well as M&A. Corporate balance sheets are in good shape, partly due to the banks taking a more conservative line on lending and partly because of strong corporate cash generation. Primary and secondary equity markets are open and strong. IPOs are back in fashion. Debt markets are improving as are M&A levels.

One thing I have noticed is that M&A processes are getting more and more complicated, due diligence requirements are getting

ridiculously convoluted and costs are going up. In my view this is because everyone is afraid to making a commercial decision without a file of paper three feet thick, and opportunities are getting missed. Commercial common sense and risk assessment are applied less often by some funders in the interests of risk avoidance. Liquid investors who accept a modest degree of risk are taking advantage. Corporates with existing funding capacity will benefit. Cash is king!

So, when the news is bad, think about what opportunities are created. It’s more fun to think that way.