HOLD THAT INVESTMENT

Anyone with a spare few quid who thinks it may be time to make a quick buck in stocks and commodity shares on the back of the US stimulus package should keep their cash in their pockets, a Dublin-based asset management company has told The Sunday Business Post.

Covestone is advising its clients that underlying valuations will return to normal, cancelling out any lift in share prices when the measures bed themselves in. The firm cautions clients to remember what happened early last year after the Fed reduced interest rates to near zero and introduced the first round of ‘quantitive easing’.

“Assets good, bad and indifferent rose from the ashes … the resultant US growth was a cocaine high that has ultimately run out of steam,” according to Covestone analysts Keith Ryan and Neil Osborne. “Despite the Fed’s best efforts to cattle prod the market into risk-taking, we see a material risk that stimulus will fail to generate any meaningful underlying recovery in the world’s largest economy.”