FOMO dominant investor sentiment

-- | 16/02/2018

Page 1 of 1

Daniel Needham: My feeling is, in this environment – this isn't an environment where we need to worry about people selling now. I think the idea that people are reducing their exposure, maybe that makes sense. This is not 2008-2009. We're seeing stock prices and asset prices, pretty much everywhere around the world, go up a lot. So, I think, the idea – I don't think the risk is that people are not taking enough risks now. I think it's the opposite. I think investors are aggressively positioned in aggregate and I think that – it seems to me that it's more of a fear of missing out environment than one of excessive aversion. I mean, really, the market volatility we've had this year is a blip relative to the pretty extreme bull market that we've seen, especially in the U.S.

 I think U.K. stocks actually, which is – U.K. is a fairly large market, around 10 per cent of the, sort of, listed global equity market, and we think that looks relatively underpriced. Now, when I say relatively, we think stocks prices are still pretty high everywhere, but the U.K. is pretty unpopular. You've got the whole Brexit concern. So, you've got the nice macro risk that everyone gets excited about and that's creating some really interesting bottom-up stock opportunities in the U.K. as well as an aggregate opportunity that we see. So, the pound is – it's been rallying recently, but it's relatively depressed as well. So, we think in those environments where people kind of trade on headlines tend to create opportunities. And so, we think the U.K. is also relatively attractive.

This report appeared on 2021 Morningstar Australasia Pty Limited

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written content of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.