Thames River multi-manager duo Gary Potter and Rob Burdett say although events in the eurozone crisis is weighing on market sentiment, several indicators suggest it will not be as severe as 2008.

Potter and Burdett, who run one of the largest multi-manager ranges in the UK, give 3-reasons why this year will not see a return to the dark days of 2008.

1. US credit markets are stable ~ compared to 2008, US credit markets are stable, as banks are showing a lot more willingness to lend than they did post Lehmans. Federal Reserve statistics measuring senior loan officers' willingness to lend showed a 18.8% increase in their readiness to grant consumer loans, compared to a 47.2% fall in September 2008.

Moreover, the LIBOR rate this time around is much lower. In 2008 the average interest rates banks were lending at was 2.82%, but at the start of 2012 LIBOR was 0.58%.

2. Corporate earnings and dividends are stronger ~ the FTSE 100 may remain rangebound between 5,000 and 6,000 for a number of years, but the multi-managers are optimistic on the outlook for dividends. Corporate earnings and dividends grew 9% last year and are expected to grow at 6%-7% in 2012. 

Dividend growth has been driven by balance sheets being so much stronger than they were during the credit crunch due to corporate debt being refinanced. Firms have de-leveraged and have held on to high levels of cash, and in my opinion this had led to balance sheets being the strongest in 30-years.

3. Businesses are buying back stock ~ share buy-backs are on the increase and at a higher level than in 2008, resulting in stronger investor sentiment towards equities this time around.

Put/call ratios are showing corporations and business owners are buying back stock in their own companies at levels a lot high than in 2008. 

This shows investors believe in their companies and take the view share prices are trading at depressed levels with plenty of upside.

 

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The above is good news however, Below Market Value property represents an exceptional opportunity in any market state, whether to Buy-to-Let or Buy-to-Live.

With as little as £15,000 rolling investment, a family home may legitimately be purchased every 6-months, each producing gross rents of c.£400pcm.

Over half the NEW landlords buying investment properties last year were small-scale or first time landlords with that trend accelerating over the year, says Countrywide.

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