Back to the Future: Volatility returns for real?

Francis, a Multi-Asset Fund Manager who qualified as an actuary, highlighted that the US stock market is on the longest bull run in history (measured by the S&P 500). This led to the theory that we could be late in the economic cycle, backed up by various recession indicators beginning to light up. Are we on the point of the bull run ending, and creeping into recession? Of course, no one knows for sure though there could be a tipping point as each recession seems to have a unique event that pushes the economy into recession. The trade war between America and China has been in the headlines – though with President Trump events are overtaken extremely quickly – and Francis deftly explained the impact on GDP (and hence recession risk) for US as it turns up the dial on tariffs.

Those in the room who thought there were “down with the kids” were put in their place when Francis asked whether we had FOMO, JOMO or FOJI (Fear Of Missing Out, Joy Of Missing Out, Fear Of Joining In). Seems that when it comes to investment returns, there is no concept of Joy Of Joining In …

It's probably widely known that indices such as MSCI ACWI is strongly weighted towards America and within the US stock market, just a few stocks (Amazon, Microsoft, Apple, Netflix and Facebook) have dominate the performance of the S&P 500 index (which works both with gains and losses). The overall message being delivered was to diversify and focus on asset allocation. Two well-known tactics that were presented in an informative and polished way by our speak from Legal & General. Past performance is no guide to (back to the) future performance.