How to time market peaks and troughs

Over the last decade, the stock market has failed to make new highs. And while you can still make money in sideways markets, you have to work harder, says Phil Oakley. Here, he gives five tips to help you achieve profits in a stagnant market.

If you had invested £1,000 in a FTSE 100 tracker fund in early 1998, its capital value would be virtually unchanged today. Yes, you would have collected some dividends, but you may have been better off investing in bonds, or even cash. You'd certainly have slept more soundly by avoiding all that volatility. The fact is that the old adage of buy and hold' as the road to stockmarket riches has been a myth for many investors. Over the last decade, the market has traded in ranges reflecting investor optimism and pessimism at any given moment. But it has failed to make new highs.

So what's changed? From the early 1980s until 2000, stockmarkets were supported by a mix of earnings growth, falling long-term interest rates and expanding p/e multiples. So profits were growing, borrowing was getting cheaper, and the amount that investors were willing to pay for a given level of earnings kept rising. As a result, anyone who bought a basket of stocks and held them throughout that period probably did well.

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Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.