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Reasons to be bullish

Simon Thompson sets out his macro and investment calls for the smaller companies market for the year ahead
Reasons to be bullish
  • There is a strong case that investors should be increasing exposure to out-of-favour value stocks
  • Government fiscal programmes are creating investment opportunities on both sides of the Atlantic

Unemployment rates could be double pre-Covid 19 levels in 2021, and government borrowing has spiked to record levels to support the fight against Covid-19, but investors have taken it all in their stride. But their response should not be that surprising given the scale of the shock-and-awe monetary and fiscal measures that have been implemented to deal with a once-in-a-lifetime event.

The game changer has arguably been the speed at which major global central banks reacted in unison to counter the threat of the global financial system being overwhelmed as the pandemic unfolded through Europe, the US and Asia. Importantly, lessons have been learned from the global financial crisis of 2008-09 to avoid previous policy mistakes being repeated. 

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