Gold prices steady ahead of Fed decision; weekly weakness noted
Investing.com - Uncertainties in the current markets are rife, but UBS still thinks the time is right to invest in U.K. stocks.
Investors are currently having to cope with a stimulating geopolitical backdrop, with a seemingly constant newsflow out of the White House, worries about high levels of debt for both governments and firms, and their ability to honour it, as well as valuations of listed stocks.
“We always should be conscious of where equity valuations are trading at any given time, but we must also recognise that they are not a reliable indicator of whether markets will rise or fall,” according to analysts at UBS, in a note dated March 3.
There are many reasons why valuations can look historically expensive or cheap, he Swiss bank said. In periods of falling interest rates, positive economic growth, and companies enjoying decent margins and earnings expansion—much like now—it would seem strange if valuations weren’t above their long-term averages.
“Now, this does not mean that markets won’t experience a correction at some point. They always do. The point is, nobody can ever predict with certainty when this will happen,” UBS said.
The recipe for successful investing is how to shelter from the inevitable volatility that is coming our way—whether from the White House or markets.
“Time and again through many market cycles (and no, we do not live in “unprecedented” times), a diversified portfolio of stocks, bonds, and alternatives has proven the most effective way to grow investments and beat the alternative of sitting in cash,” UBS added.
Adding assets such as gold and structured strategies can help reduce volatility further while still leaving investors with exposure to growth.
“This time is unlikely to be any different. And this is why we should invest now.”