Jeff Prestridge: the best way to build your wealth

Don’t be distracted by the Barbie Land or Pessimist brigades, urges our columnist. You can have a foot in both camps and benefit from two of the best investment brains in the UK.

What I love about the investment world is its diverse opinions.

Investment managers - the experts whose world it is and whose acumen we rely on for our ISAs and pension funds to do us proud - rarely agree on anything.

Whether it’s how best to obtain value from stock markets or whether markets are going up or heading for a fall, views rarely concur.

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This diversity of opinion has reared its head again in recent weeks. In one camp sit the cheery optimists who believe in a Barbie Land-like stock market. One that soars upwards through blue skies despite gathering economic storms.

In the other are the pessimists who believe there is more gloom and doom in the offing. For them, no colourful skies and no profusion of all shades of pink. Just dollops of greyness and misery.

In the Barbie Land pink corner is Fidelity’s Alex Wright, a fund manager who I like and respect.

Despite the dire economic backdrop and the twin evils of rising interest rates and stubborn inflation, Mr Wright believes we are on the verge of a UK stock market rally to end all rallies.

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It’s fill your boots time according to the manager of investment fund Fidelity Special Situations and stock market listed Fidelity Special Values (LSE:FSV).

Mr Wright’s view is not as madcap as it seems. He says the UK stock market looks cheap compared to other established markets (the United States especially) and therefore provides a compelling investment opportunity on a three- to five-year time horizon.

“I am excited about the opportunity on offer today,” he told the world earlier this month. “The current [UK] market is creating a fertile environment for active stock pickers to buy good, quality companies at cheap valuations.”

I’m sure I’ve heard Mr Wright say this a few times in recent years, but credit where credit is due: he’s nothing but consistent in his beliefs. And I am sure that at some time in the future, the good-quality stocks he likes will no longer be cheap, providing handsome profits for the Barbie Land camp believers.

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In the opposing camp is Nick Train, the main investment brains at asset manager Lindsell Train. Like Mr Wright, Mr Train is a hugely respected fund manager, running the whopping £4.4 billion LF Lindsell Train UK Equity fund. And like Mr Wright, he has an intimate knowledge of the UK stock market.

Yet while Mr Wright talks of opportunity, Mr Train talks of caution. He says UK equities are “abysmally” out of favour and might well remain “frustratingly cheap for a very long time”.

He adds: “I am cautious because I know that one person’s ostensibly low valuation is another’s moribund value trap. In other words, markets can stay frustratingly cheap for a very long time.”

Like Mr Wright, however, he did concede that there were some “wonderful” companies around that were “wrongly priced” (in other words, cheap as chips).

What should investors make of all this? Well, I would turn a blind eye to all this professional noise, however articulate and cerebral Mr Wright and Mr Train are.

Let’s be honest. No one knows whether now is the best time to invest, or whether further stock market volatility is around the corner. Not even Mystic Meg has a clue. The key, as far as investors are concerned, is to keep investing for the long term.

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That means patiently dripping money into equities (preferably through a broad range of investment funds and investment trusts) every month via your tax-friendly pension or ISA.

Don’t be distracted by the Barbie Land or Pessimist brigades. Stay invested. Stay committed. Stay loyal to the belief that over the long term, equity investing is the best way to build wealth.

Indeed, I would say that rather than listen to Mr Wright and Mr Train, the best strategy is to encompass their high-profile funds within your portfolios.

Then you have a foot in both the Barbie Land and Pessimist camps while benefiting from two of the best investment brains currently running investment funds on behalf of UK investors.

Having absorbed the thoughts of Alex and Nick, I’m now off to see Barbie and Ken in my pink shirt at the local cinema (eat your heart out Ryan Gosling). Keep investing. Ignore the noise.

Jeff Prestridge is group wealth & personal finance editor of DMGT.