 and company-specific economic risks. The health of the economy and the profits cycle is more important for equity investors, so they tend to move later than bonds. The good news is that, as with bonds, shares discount the future. They don't require the sun to shine, they just need a break in the clouds. Described in this way, it all sounds very logical and easy to navigate. Government bonds, then corporate credit and finally shares. The reality, of course, is that this is an oversimplification and the exact timing of the turn in each cycle is unpredictable. Holding a balanced and diversified portfolio throughout remains sensible. I expect to see positive returns from both bonds and shares next year, which may surprise an observer focused on the economic headlines. These will remain grim through much of 2023. Holding either asset will be more rewarding next year than this. But rotating steadily from an overweight in government bonds at the start of the year to a preference for shares at the end could make a good year even better. Tom Stevenson is an investment director at Fidelity International. The views are his own){kind=link}
The inflation and interest rate storm continues, but there are already signs of recovery
The conventional wisdom about trying to time the market is that you shouldn’t.
Catching the tops and bottoms with any degree of accuracy or consistency is near impossible and the cost of getting it wrong can take a heavy mental as well as financial toll.
But there is a difference between an all-in, all-out approach to investing and more subtle attempts to weight your portfolio to what you think will be the better performing assets at any point in time.
It’s the equivalent of gentle nudges on the tiller to catch shifts in the wind direction as opposed to violent oversteering with the associated risk of a painful smack on the head from a swinging boom.