W-Shaped Recovery - part 2
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Justin's previous post A W-Shaped Recovery
I posted my thoughts on a weak,
possibly W-shaped, recovery and its affect on asset managers only
two weeks ago and it seems the news has suddenly gone all bad on
the economy.
The first tell-tale sign that we might have a
double dip recession is the weak consumer demand in UK in January
and abroad the collapse of Greek credit has caused panic in the
markets. This is going to put the cost of money up as investors
demand more for greater risk and it will affect the UK
considerably.
The housing market has experienced a slight
strengthening but only because there is so little supply and people
can still get very cheap mortgages. If rates go up (and they surely
will) supply will certainly increase and demand will drop. As the
cost of houses is still well above the long term average a further
fall remains possible and stagnation probable.
So with all this misery, is it still good to be an
asset manager?
I believe it is, provided that your business
has the right products for your market. These market conditions are
perfect for demonstrating the valued added of real fund managers.
When markets just go up, a tracker fund is cheaper, but when
markets go up and down, only the shrewd can buy and sell so as to
take advantage of market movements to make money.
With UK savings rates going up, tax credits on
pensions gone and government debt out of control people are looking
to plan for their future more than ever. That means they need a
good fund manager.
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