FINANCE: Positive Side to the Global Economy and Investments; Will Self, Managing Director of Stratford-Based Self Chartered Financial Planners, Says Business Owners Should Raise a Half-Empty Glass and View It as Half-Full, Giving Ten Reasons to Be Cheerful about the Global Economy and the State of Investment Markets:
1. An awful lot of bad news is in the price. It is the nature of markets to assimilate new information quickly, which means that as we sit around feeling gloomy markets have moved on.
2. In bad times, demand for risky assets falls. So the compensation for taking this risk needs to be adjusted higher to attract investors. Lower share prices relative to fundamentals just mean expected returns are higher.
3. Governments in the US, Europe, the UK and Australasia are intent on recapitalising their banking systems and have credit flowing. The extraordinary response of risk assets to recent moves on this front shows how important confidence is in supporting markets.
4. Central banks have mounted a globally co-ordinated reduction in benchmark interest rates. Markets are priced for further moves. Insofar as banks pass on these lower borrowing costs, this will support business and consumer activity, buttressing the real economy.
5. Some governments are providing fiscal stimuli to bolster economic activity. …