Stephanie Flanders warns 2014 is show time for the global recovery

Stephanie Flanders, UK and European chief market strategist for J.P. Morgan Asset Management and former economics editor at the BBC, warned that 2014 will be ‘showtime’ for the global recovery in a keynote economics speech at Barnett Waddingham’s Investment Outlook Conference in London today.

Speaking at the conference, Flanders said that while economic confidence had improved, the year ahead could be rocky for investors:  “After five years of recurrent gloom, it is welcome news that there is finally widespread optimism about the global economy; however optimism can only take you so far.  Investors should be expecting more variations in returns, and more bumps in that road during the year ahead.  2014 really is ‘showtime’ for the global recovery”.

"After five years of recurrent gloom, it is welcome news that there is finally widespread optimism about the global economy; however optimism can only take you so far."
Stephanie Flanders JP Morgan

Flanders also outlined her three ‘investor rules of the road for 2014’, key potential issues for investors:

THINK ABOUT REBALANCING: If you benefited from the stellar equity returns in 2013 then prudence says you should probably rebalance your portfolio, even if you think the bull market has more room to run.

BE SELECTIVE: With US valuations no longer cheap, there may be more value opportunities in the Eurozone, particularly if earnings start to recover. Some emerging markets assets also now look attractive, particularly those that should benefit disproportionately from recovery in the US and Europe. But discrimination will be vital – and a long-term view.

EXPECT MORE BUMPS: The last two years have brought above-average returns to equity investors, with well below-average volatility. Last year was truly exceptional, on both fronts. Don't expect to have such an easy ride in 2014.

Barnett Waddingham’s Investment Outlook Conference brought together 200 delegates from the investment industry today (Wednesday 22 January) at Lancaster London Hotel in London.  In addition to Stephanie Flanders’ speech, delegates heard 2014 outlooks on equities, bonds, emerging markets and property with speakers from Barnett Waddingham, Investec, BlackRock, Threadneedle and Capital Group.