Russ Mould, investment director at investment platform and stockbroker service AJ Bell, has been at the forefront of the firm’s strategic thinking for seven years. Prior to this, Mould spent almost a decade at Shares Magazine, becoming editor in 2008.
Throughout his career in investment, which includes roles such as managing director at UBS Investment Bank and fund manager at Scottish Equitable, Mould has witnessed first-hand the shifting dynamics of the markets. He told Opto Sessions that we could be on the precipice of a huge shift.
“I think there’s got to be a chance [of a new market cycle] just because what’s happening in the background at the moment is highly unusual, at least in modern investing times,” Mould said, considering the coronavirus pandemic and policy response.
“Given that the dramatic background, you could see something different emerge just because what we’re seeing is very unusual,” he stated, pointing to the possibility of inflation. This, he said this, “would potentially be a massive game changer”.
“I think there’s got to be a chance [of a new market cycle] just because what’s happening in the background at the moment is highly unusual, at least in modern investing times”
If this happens, Mould suggested, “it will be a phenomenal change”. He explained that “everything that we’ve seen [in the past three decades] has effectively been disinflation and interest rates going lower. That has favoured growth stocks, it’s favoured, to a degree, pricing power stocks, it has obviously hugely favoured bonds, but it’s generally given an awful lot of asset classes a lift.”
If there were to be inflation, he said this could “lead to a preference for cyclicals relative to value — relative to growth — because if there’s lots of inflation then there’s potentially lots of growth just laying around in the street at much lower multiples”.
As you wouldn’t have to pay huge multiples to access growth stocks, Mould explained that this would favour real assets, commodities and precious metals, while also doing “absolutely no good for bonds or cash at all”.
For more on Mould’s outlook, and for potential market opportunities that might entail, listen to the full episode, here.
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