Hargreaves Lansdown founder Peter Hargreaves has dismissed those predicting a prolonged period of underperformance for equity markets, saying such "experts" are habitually wrong.
So confident is Mr Hargreaves in the stock market he said has about £2bn of his personal cash invested in equities, including a substantial holding in the investment brokerage business he co-founded Hargreaves Lansdown.
He said he also has “a lot” invested in the £3.9bn Lindsell Train Global Equity fund, and he co-founded the Blue Whale Growth fund with an initial investment of £25m.
Involved in the market for over forty years, he said he has seen many market cycles and many incorrect predictions of gloom.
“The experts are out in force again, the same ones who didn’t forecast the financial crisis in 2008 and forecast financial meltdown post the Brexit vote.
"Stock markets are expensive but interest rates are still historically low and whilst there will be much forecasting of an imminent rise they will nevertheless remain low.
"Commodities and property are also very expensive, but even they are cheap in comparison to such items as bitcoin, art and classic cars - $100m (£72m) for a piece of canvas with a bit of paint on it that doesn’t provide an income; if you want to find bad value look no further.”
He added: “Investors should take great comfort that ‘the experts’ are forecasting Armageddon. The doom and gloom is factored into the only really liquid market - the stock market. In essence markets have shrugged off the avalanche of negative sentiment.”
Mr Hargreaves, who was a prominent advocate of the UK leaving the European Union, said his favourable view on the global economy is based on the "very positive" actions of US President Donald Trump "in the only economy that really matters".
"I am no great aficionado of Donald Trump as a business man or person. But he has championed two very beneficial policies: the cutting of taxes and the reduction of regulation - regulation in the main is no more than a tax on the law abiding.
"I would have liked him to cut government spending too but two out of three is two more than any other modern industrialised economy.
"The world depends on the great American machine. The 'experts' in their normal out of touch mode and distaste for Trump have missed this tonic to the world economy.
"They will only forecast the euphoria when it has happened and the sheep who have followed them will have missed it.”
However some fund managers take a much more cautious view on markets.
Bruce Stout, who runs the £1.7bn Murray International investment trust, said he believes there are reasons to worry.
“Seldom has the disconnect between global economic fundamentals and equity market sentiment been as pronounced as the chasm which currently exists.
"Record highs in sovereign, mortgage, household and credit card debt cast darkening shadows over numerous Western nations already crippled by insufficient growth and declining living standards.”
Advisers who advise clients to invest for the long term have said short-term market predictions are unhelpful.
Philip Milton, who runs Philip Milton and Co, an intermediary firm in Devon, said investors who try to time the market by selling at the top, with the intention of buying the shares back later after a fall, are often proven to be incorrect.
But he said it is concerning how much of the gains made by equity markets have come from a small number of US technology companies. He said the tax treatment of those companies may change in the years ahead.
He also expressed the view that returns from US shares have been artificially boosted by both share buybacks and monetary policy.
Mr Hargreaves long-term view is that UK investors don’t buy enough US equities, and focus too much on equity income shares.
David Coombs, head of multi-asset investing at Rathbones said his investment strategy in the current market conditions is to: “Focus on the US, Japan and Asia Pacific for growth. Build up government bonds in Europe on weakness to combat the threat of recession and avoid European and UK domestic earners.”
David.Thorpe@ft.com
