Listen to the boss of Standard Life Aberdeen and you’d be best hiding under a rock for a couple of years.
Keith Skeoch reckons the current stock market rallies are totally overdone and fail to factor in the bigger macro-economic picture.
He’s absolutely right. The FTSE-100 and the Dow in particular rise and fall according to the latest news on the covid outbreak – infection rates, R numbers and, now, the unwinding of global lockdowns.
And while focusing on the micro, investors ignore the macro – that most companies’ earnings aren’t going to get back to anything like normal for perhaps two years. If “normal” ever happens again.
The recession will be deep and global. Shares, which correctly tumbled in the first weeks of lockdown, have forgotten that.
Not everyone is chasing the rallies. Standard Life Aberdeen (or “Stabbers”, as traders shorten it) has seen much of its £1 billion net inflows from investors go into cash funds as folks duck out of equities.
Wise, but those running money aren’t paid to stick it under the mattress.
So where can they go? While the rule of thumb is usually that mid-cap stocks rally hardest from a downturn, one option could be Vodafone.
There have been false dawns aplenty for this unloved stock. Shares have halved in the past year amid concerns about debt and its market position. Lately sentiment was battered by the O2-Virgin Media deal.
But the fall feels overdone. The UK is only about 10% of Voda’s earnings, and not being able to offer customers broadband here – as O2 soon will – isn’t a death knell. Voda can still wholesale from BT and won’t have to invest in digging up the country’s roads.
Meanwhile, it’s sitting on a phone towers business which could be worth over 20 billion quid when it floats next year. Assuming Amanda Holden hasn’t had them all burned down.
There are worse places to park your money. Just don’t tell Keith.
