Soaring markets give share investors pause

Experts are wary of talking up stocks or funds as fears of an investment correction grow ever stronger.

Global stockmarkets have been hitting highs this week. New York's Dow Jones set a new all-time high. Meanwhile, the FTSE 100 reached its highest level for five years.

Do the rallies mean investors should sell and take profits ahead of an anticipated market correction, or is this the beginning of an stock market boom?

"Investors shouldn't pay too much attention to an index figure," advised Adrian Lowcock of Hargreaves Lansdown. "Instead they should focus on their objectives and the funds they invest in."

He said market prices are based on their relative value to other assets. "Since mid-2012, cash and gilts have looked increasingly unattractive and have made equities look more attractive," he said.

"Generally the market rises in the UK bring us back to the levels seen in 2008, however for equity income investors and those in good actively managed funds they have already reached new highs, so this week's rising index levels shouldn't be of too much concern."

Brian Dennehy of FundExpert, also advises investors not to get too excited about this week's news. In fact, he believes investors have had a dilemma for many months.

"Do you avoid equity markets knowing they are rigged by central bank action? Or do you hold your nose, get involved to some extent and stay close to the exit?" he said.

"If you are in the first category, don't get sucked in now. Be patient," Mr Dennehy advised. "If you are in the latter category, stay very close to the exit.

"Complacency abounds on a range of indicators, flashing just as they did around prior interim peaks over the past decade."

He said the FTSE 100 could well climb higher, possibly to as high as 7000. "But investors must bear in mind that the higher the market goes, the more confident most others will become – whereas in the case of the most successful investors, the higher the market goes, the more cautious they will become," Mr Dennehy said.

Julian Parrott, a partner at Edinburgh-based financial advisers Ethical Futures, told the ethical website Blue & Green Tomorrow that he found the market rally worrying.

"I'm inclined to think that it's false optimism stoked by a great load of cash which is facing near-zero return on deposit and is tempted to take risk to improve return," he said.

"Assets prices are rising on false optimism. I'm pleased to see markets rise but bracing myself for a correction," Mr Parrott said.

Adrian Lowcock agrees that a correction could be in the offing, but not necessarily soon.

"At some point the market will take a breather, but given that so many are expecting a correction it may be a while before it happens. In fact they tend to occur when they are least expected," he said.

"However, investors shouldn't wait for such events as over the longer term they will be better off investing rather than trying to call the markets."

He pointed out that for many people rising share prices will be good for their pensions, boosting their value.

"That could tempt people to think they can cut their contributions but I would caution against that unless they are getting close to their lifetime limit. Even then it would be best to seek professional advice to ensure whatever decision people make is the right one for them in the long-term."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Payments Operations Assistant

    £23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

    Recruitment Genius: Telephone Debt Negotiator

    £13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

    Guru Careers: Communications Exec / PR Exec

    £25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

    Guru Careers: Pricing Analyst

    £30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

    Day In a Page

    On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

    On your feet!

    Spending half the day standing 'reduces risk of heart attacks and cancer'
    Liverpool close in on Milner signing

    Liverpool close in on Milner signing

    Reds baulk at Christian Benteke £32.5m release clause
    With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

    The big NHS question

    Why are there so few new GPs when so many want to study medicine?
    Big knickers are back: Thongs ain't what they used to be

    Thongs ain't what they used to be

    Big knickers are back
    Thurston Moore interview

    Thurston Moore interview

    On living in London, Sonic Youth and musical memoirs
    In full bloom

    In full bloom

    Floral print womenswear
    From leading man to Elephant Man, Bradley Cooper is terrific

    From leading man to Elephant Man

    Bradley Cooper is terrific
    In this the person to restore our trust in the banks?

    In this the person to restore our trust in the banks?

    Dame Colette Bowe - interview
    When do the creative juices dry up?

    When do the creative juices dry up?

    David Lodge thinks he knows
    The 'Cher moment' happening across fashion just now

    Fashion's Cher moment

    Ageing beauty will always be more classy than all that booty
    Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

    Health fears over school cancer jab

    Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
    Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

    'I forgive everyone, but I don't forget'

    Fifa president Sepp Blatter issues defiant warning to opponents
    Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

    Weather warning

    Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
    LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

    High hopes for LSD

    Meet the volunteer users helping to see if it cures depression and addiction
    German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

    Saving Private Brandt

    A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral