It was an exceptionally busy day for the Stockopedia team at this year's UK Investor Show. But happily I managed to duck out of duties on the stand for a short time to listen to Mark Slater's presentation. Slater is chief investment officer at Slater Investments and ranked as one of the best performing fund managers in the UK, with funds including the MFM Slater Growth and MFM Slater Income. As Paul mentioned in his blog, Slater is a source of a huge amount of investing common sense, so it was no surprise that his presentation was packed out. Here is some of what he had to say…
New and existing concerns
Tackling the macro view, Slater picked up on a number of concerns he highlighted a year ago, but continue to persist.
- We have still got distortions from the effects of quantitative easing in the market.
- There hasn't been a market correction (of more than 10%) for some time, and that is still the case. Although he noted that there had been bigger pullbacks among small-cap and technology shares.
- He said it was becoming increasingly difficult to find high quality growth companies, with most now trading at 20x earnings or more.
Among his more recent concerns, he said that the pick-up in currency volatility was making life difficult for both investors and companies. For the most part, he noted, the market is being grown up about this, with companies prepared to report on an actual and constant currency basis. However, it does make life complicated. He also mentioned the fact that the Eurozone has joined the “QE party", which elevates risk because if additional challenges emerge [a possible reference to Greece], it's difficult to see what the solution would be.
Ideal conditions for investors
Having acknowledged the present concerns, Slater said that conditions for equity investing are ideal, with the current 'cheap money' environment likely to continue for “a long time". He said that there was less certainty that rates will go up, likewise in the US, “because the world doesn't work otherwise". In addition, he noted:
- The yield on equities is still attractive versus bonds.
- The bear case, which includes factors like ISIS and the Middle East, is well rehearsed and is therefore priced-in.
- There are pockets of exuberance but most investors are looking over their shoulder a bit (which is a good thing).
Slater said that the risks of being out of the market are…
