2009 was an easy year for investors; and now comes 2010

2009 was an easy year for investors; and now comes 2010
Jan 4, 2010 - PropertyGuru.com.sg

Investing in 2009 was very easy for some people – just invest in oversold riskier assets and wait for them to rise. However, 2010 could be a difficult time, requiring selection and market timing to get the best results.

Many investors felt that the financial system would not collapse into a new Great Depression era, and as a result, many riskier assets like high-yielding bonds and stocks were sold off.

The gain last year came mostly from across-the-board buying, about 30 percent from world stocks year-to-date.

The more sold-off an asset had accounted, the higher it increased as investors almost indiscriminately charged out in what, by then, become virtually zero-yielding cash funds in favour of any yield they could find.

It was triggered by the authorities saying they would not let another major bank go under.

Entering 2010, however, a lot have changed. Large price increments are eaten up by what were seen as historic opportunities and central banks are preparing to improve the liquidity. Some 2009 correlations are now falling apart, leaving investors to work harder.

"2010 is going to be a year of discrimination with a very long bias towards quality," said Bob Parker, vice-chairman of the asset management arm for Credit Suisse.

The need of selective thinking also comes from the global economy, which is both fragile and uneven. Investors become more cautious about investment backdrop and as a result, caution intensified by debt problem in Greece, Spain and Dubai.

"Cyclical tailwinds and structural headwinds" is how William De Vijlder, the global chief investment officer of Fortis Investments, described the current investment situation.

While emerging markets remain the favourite options for many investors this year, the focus is mainly on fiscally good countries in Asia like China, rather than on Eastern Europe.

"(There will be) more differentiation rather than just buying an asset class or region," said Wayne Bowers, chief executive officer for Northern Trust Global Investments' international division.