The editorial in Investors Chronicle this week by Rosie Carr noted that the FTSE 100 has delivered a storming performance year to date. It’s risen by 12% beating both inflation and the S&P 500.
It appears investors are looking to avoid a possible crash in US tech stocks particularly those focussed on AI solutions. Also earnings expectations for large UK companies have been rising and buy-backs have also been prominent. Does that mean that we can all relax and buy UK large cap stocks without much thought?
I think that would be very dangerous. Such stock market trends are simply a symptom of how the markets move in emotional and irrational ways.
Small and mid-cap stocks seem to be more rationally priced of late but are still not exactly cheap. I continue to look for well managed companies with a good return on equity and with some barriers to entry. So in essence, and as usual, I won’t be following the herd.
Roger Lawson (Twitter: https://x.com/RogerWLawson )
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