Advertisement
Features

Gervais Williams: how will we get out of a recession?

We've endured plenty of recessions before. But the problem this time is that central banks don’t have much room to cut interest rates, says Gervais Williams.

Gervais Williams

Miton fund manager Gervais Williams is worried about recession. The recent inversion of the yield curve in the US (where long-term interest rates are lower than short-term ones) has historically predicted a downturn, and the problem is that central banks today don't have much room to cut interest rates. As Williams tells Jennifer Hill of Citywire's Investment Trust Insider: "We have recessions from time to time, but how do we get out of it this time?"

Advertisement - Article continues below

As a result, he has been taking out "downside protection" in the form of put options, which will pay out if the FTSE 100 slides. "They cost money, but if things get really nasty it's nice to have an asset that goes up."

Williams is, however, more relaxed about Brexit. "A chaotic Brexit isn't very likely. There might be short-term queues on motorways or difficulty getting foodstuffs over the border...but we've seen this type of thing before." Indeed, with his focus on small and micro-cap stocks, he sees it as a potential opportunity.

For one thing, UK stocks are far cheaper than their US counterparts. As a result, "there is an astonishingly attractive potential for the UK market to enjoy a period of outperformance over other markets". He also expects to see plenty of takeovers after Brexit has been resolved, particularly among small companies with overseas earnings, as caution over the UK economy has left small stocks looking particularly cheap. "I don't ever remember seeing such a disparity between the majors and the micro caps."

Advertisement
Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/investments/investment-strategy/investment-gurus/601532/terry-smith-im-not-used-to-being-ignored
Investment gurus

Terry Smith: I'm not used to being ignored

Running a £20bn fund doesn’t guarantee good treatment from the companies you invest in.
22 Jun 2020
Visit/investments/stocks-and-shares/tech-stocks/601498/jeremy-siegel-pandemic-played-right-into-the-hands
Tech stocks

Jeremy Siegel: "pandemic played right into the hands of the FAANG stocks”

Jeremy Siegel, professor of finance at Wharton, says the tech giants benefited from the closure of many physical businesses.
12 Jun 2020
Visit/investments/investment-strategy/investment-gurus/601457/michael-cembalest-investors-should-worry
Investment gurus

Michael Cembalest: investors should worry about Biden

Many people see Joe Biden as an "establishment" candidate for the US presidency. Perhaps they should look closer at his policies, says Michael Cembale…
5 Jun 2020

Most Popular

Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
Visit/economy/inflation/601584/the-end-of-the-bond-bull-market-and-the-return-of-inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020
Visit/investments/stockmarkets/601611/nasdaq-all-time-high-markets-and-the-real-economy
Stockmarkets

How can markets hit new record highs when the economy is in such a mess?

Despite the world being in the midst of a global pandemic, America's Nasdaq stock index just hit an all-time high. And it's not the only index on a bu…
3 Jul 2020