Please note we have relocated to a ‘temporary’ business address whilst Weighbridge House undergoes extensive renovations.

Our temporary premises are situated at Suite E3, Sarnia House, East Building, Le Truchot, St Peter Port, GY1 4EN and are located 200m from Weighbridge House on the corner opposite Edward T Wheadon House – (Social Security office).

We hope to be returning to Weighbridge House upon completion of the building works later on in 2020.

Coronavirus (COVID-19):

Continued service from Gower during the coronavirus pandemic
2020: Retrench, Rally; Repeat
Toby Birch, Gower Financial Services Toby Birch 8th January 2020

2020: Retrench, Rally; Repeat

 Whenever headlines are hysterical and commentators equally excitable, it is always worth inspecting the numbers for a reality check. Following last week's drone strike on a leading Iranian general, US equities fell by -0.8% on Friday but the inevitable risk-off move in markets has been moderate. Not surprisingly crude prices were higher but not excessively so. Now that America is a net exporter of oil they are far less dependent on Middle Eastern production than in the past. Paradoxically, the higher the oil price goes the more that US shale-oil becomes profitable thereby offsetting the usual feedback loop that generates a price spike. One asset that has moved up aggressively overnight is gold with gains in excess of +3%.

We are expecting a natural pull-back in share prices in the first few weeks of 2020. This is because the break-out into all-time highs has sent the financial Fear and Greed index well into the 'greed' zone (currently 93/100) so any decline will provide a welcome period of respite and consolidation ahead of the next up leg.

Despite the temptation with the start of a new decade, we have avoided making grandiose forecasts about the '20's' to come. The long-term is made up of a series of short-term scenarios and the latter is all we can realistically attempt to master. Ultimately the most important factor to ascertain is whether we are in a bull, flat or bear market. Last year the bears owned the news while the bulls owned the market. The longer that bad news abounds (or more correctly negative opinions) the better this is for us as it lives up to the old Wall Street adage that 'markets climb a wall of worry'. Positive opinions will eventually abound along with the usual euphoria. These are warning signs that a market peak is approaching but we are a long way from that scenario.

Many point to the length of the current upturn without comparing economic output with past cycles or going beyond personal memory. The decade-old bull market is by no means excessive in length in the context of the last century. One must also be aware that financial commentary is often an echo chamber where simplistic views and catchy phrases are repeated with little evidence of proper research. The classic one last year was the chatter about inverted yield curves as a forerunner for recession. As we highlighted at the time, the 2019 inversion most closely matched episodes of fear in 1998, which of course preceded a major melt-up in markets, rather than a melt-down. There seems to be an inherent human desire to simplify relationships to a linear 'A leads to B' without considering the backdrop, causality or cyclical nature of markets.

Looking ahead, we can expect at least another positive year but more likely two. The final phase of a bull market is the most rewarding with the closing scenes typified by a high degree of retail buy-in while the smart money makes an exit. We are highly attuned to such crowd behaviour and will be highlighting and acting on it as we approach any climactic spike but this will be an issue for another year in the future.

Disclaimer
Past performance is not a guide to future returns. Please note that the value of your investments can go down as well as up and you could get back less than your original investment. 

The information and views expressed in this blog is for general information purposes only and is provided by Gower Financial Services Limited ("Gower", "we").  While we endeavour to keep the information up to date and accurate, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the blog for any purpose.

The blog is based on the opinions of Gower and therefore does not reflect the ideas, ideologies, or points of view of any organisation with which Gower is, and may in the future potentially be affiliated with.
This blog does not constitute investment or financial advice or a representation that any investment strategy or service is suitable or appropriate to your individual circumstances.  

Gower will not be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of the information contained within this blog.

Gower Financial Services Ltd is licensed and regulated by The Guernsey Financial Services Commission.
 Company registration number 37312 and has its registered office at Suite E3, Sarnia House, East Building, Le Truchot, St Peter Port, Guernsey, GY1 4EN.

Latest News