Fidelity’s Bolton says global bull market has begun

Fidelity’s Anthony Bolton, whose contrarian bets made him a top UK fund manager for over two decades, says the global markets are showing signs of a turnaround on the back of improved manufacturing data and global inventory levels.

“Economic data is starting to get less bad,” Bolton, president — investments of Fidelity International, an affiliate of Boston-based Fidelity Investments, told reporters on Thursday. According to him, stock valuations are cheap and tonnes of money is  sitting on the sidelines, all of which gives hope for another big market surge later this year.

The London-based executive , here to promote his book Investing Against the Tide, said investors should not see the rise in markets as a bear market rally. “This is a very early stage of a new bull market rather than a bear market rally as a lot of other people are thinking.”

The recent rally in the global financial market has seen the Dow Jones gain 23% from its lows of 6547 on March 9. The Sensex, even after its 337 point correction on Thursday, is still showing a gain of 34% from the March 9 low of 8160.

From a historical point of view, the time is ripe for turnaround, Bolton said. “Considering that we have gone down worse than any bear market in 70 year, things might be ready for a turnaround”.

The global indices haven’t seen a worse correction since the 1930s, when the markets lost 86% of their value, compared with the recent 57% fall.

Another important factor to watch out for is the sentiment among investors, noted Bolton. With mutual funds in developed markets in redemption mode for some time, it is a positive for a turnaround story, he said.

Bolton feels cheap and shunned bank stocks would lead stocks out of the doldrums. He also favoured consumer cyclicals. “People should be putting money in consumer cyclicals, technology shares, financial sector companies and stocks bought based on value considerations,” he said.

Bolton was not too optimistic about commodities and industrial shares which were at the centre of attention during the last bull market that ended in 2008. “Yes, they can have a bounce and recovery, but I don’t think they are the best place to be in the next bull market,” said Bolton, who has been with the Fidelity since the launch of its first UK funds some 30 years ago.

Bolton also spoke of the important qualities of a fund manager such as temperament and a desire to win. “To be a successful fund manager a person has to be flexible in his beliefs, have integrity and experience, and be happy to go against the crowd. Also he should be able to see beyond the obvious as well as have a hunger for analysis,” he pointed out. Among all these, first and foremost mentioned was the ability to go beyond the obvious and see the effects of events beyond the immediate consequence.

(with Reuters)