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<\/p>\nWhen investing it often pays to do the opposite of what others are doing.<\/p>\n
Of course, there are some caveats to this. Most investors will tell you they are a contrarian \u2013 and they can\u2019t all be. Meanwhile, adopting a strategy of just buying all the rubbish others are selling is not necessarily a winner.<\/p>\n
Nonetheless, swimming against the tide has a history of success.<\/p>\n
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This chart using Research Affiliates data shows the UK stock market’s CAPE ratio at 14.1 at the end of August 2017, which stands at about the long-term median. This makes the UK market neither cheap nor expensive historically, indicating decent but not knockout returns<\/p>\n
The problem with the contrarian scenario is that unpopular as it is, the UK stock market isn\u2019t particularly cheap.<\/p>\n
The price to earnings ratio is flashing red at 31, according to data from Star Capital, while the longer-term view offered by the CAPE ratio (cyclically adjusted price to earnings) shows a reading at the end of August of 14, pretty much on the long-term median, according to Research Affiliates data.<\/p>\n
I prefer to pay more attention to CAPE\u2019s ten-year view than the volatile one-year PE ratio and it bodes well for decent but not spectacular returns.<\/p>\n
While I\u2019m more of a fan of the long-term growth potential of Asia\u2019s emerging middle-class \u2013 and not entirely convinced we\u2019ll pull off Brexit without shooting ourselves in the foot \u2013 the fact that others don\u2019t like the UK interests me.<\/p>\n
I\u2019m interested particularly in the bits of the UK that people don\u2019t like, so I will be looking for some investment trusts and funds with a value or recovery perspective.<\/p>\n
I wouldn\u2019t bet my flat on it, but buying a bit more unloved stuff in the unloved country doesn\u2019t seem a bad idea.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
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