Shares are enjoying a good run of late with even the much-maligned UK market doing well. This is confounding many investment strategists, while year-end forecasts are being revised up as previous estimates become redundant. Despite the many economic and geopolitical challenges facing policymakers, markets are climbing the wall of worry. The question is whether this can continue. All-time highs often make investors nervous. Yet, while accepting that volatility will be a constant companion, there are good reasons to believe progress is sustainable. The challenge facing investors is to ensure adequate exposure to those markets offering better potential – and this may involve taking profits elsewhere.
The wall of worry
Equity markets are building on the solid gains achieved last year. Year-to-date figures to 31 May 2024 show total returns of 8.68 per cent for the FTSE All-Share Index, 9.65 per cent for the MSCI World (£) Index and 5.03 per cent for the FTSE All-Share Closed-Ended Index. Each time there has been a pullback, sometimes when expectations of interest rate cuts in the UK and US have been reduced or postponed, markets have found renewed strength and moved on. The market adage ‘sell in May’ has had little traction by way of financial commentary.