Collapsing tech stock prices, conflict in Europe, fears over inflation and higher interest rates, “lots of things have been worrying the markets at the start of 2022,” says Gary as he discusses the last turbulent few weeks and how Courtiers Funds have fared.
While not being complacent, Gary points out that Courtiers was formed in 1982, the same year as the Falklands War, and that during his long career the company has been through several crises. As he says, “There is always some sort of geopolitical risk that is bothering people.”
- As to the recent fall in markets, predicting a crash is notoriously difficult. Gary points out “the market has predicted 50 of the last two.”
While recognising tail risk – “those extreme risks that might affect the market” – Gary says Courtiers prefers to rely on a tried and tested strategy of buying stocks “with defensive qualities”, those with “decent balance sheets, good cashflow and that are not overly priced.” “We have positioned ourselves sensibly in order to have clients’ long-term interests in mind.” Even at times like these, Gary’s faith in stock markets “to climb the wall of worry” remains undimmed.
The first few weeks of the year has also presented Courtiers’ Investment Team with “a lot of really good opportunities”, seeing many stocks on attractive valuations, with price/earnings multiples of 11,12 and 13.
“This is not a doom and gloom market,” there are opportunities in Japan, South Korea and Brazil. The trick is “you have to find them”, which is where Courtiers’ in-depth research comes into its own. Needless to say, this is not a time for anyone to buy the big tech stocks or cryptocurrency, “which come with massive dangers at the moment.”
The world is now thankfully on an irreversible path towards a clean energy future and away from carbon. For Gary and the rest of the Investment Team, this is an exciting time, and one replete with opportunities. As long as you are on the right side of history as it were. “You want to own businesses that are going with the flow and that are going to benefit from the trend.”
Gary accepts that some investors might have had good reason to question if they missed out on the gains made by other investors holding tech stocks last year. However, he believes the most recent performance figures vindicate Courtiers’ approach of staying away from such overvalued stocks, with the three Multi-Asset Funds in the top quartile of funds in their IA Sector, for three months, six months, 12 months, three years and five years.