RE: Leaving Aim ..4 May 2024 11:39
AIM rebound
true, though, that markets run in cycles, as investors react to swings in interest rates, inflation and, like any human activity, fashion. Aim has been out of favour before and rebounded strongly. It was crushed after the 2007-08 banking crisis and fell below 400 points in February 2009. It more than doubled over the next two years. It lost a third of its value at the start of 2020 when the pandemic struck and then surged to an all-time high 18 months later.
Time, then, for another Lazarus-like recovery? Maybe.
In the past, Aim has perked up roughly in step with the main market, but it has not yet shown signs of following the FTSE 100. Is it possible that investors will not return, that the lure of technology stocks, the rise of passive investing and the dearth of small-cap fund specialists mean that Aim won’t bounce back? Richard Power, head of smaller companies at Octopus Investments, is scornful of that theory: “At the bottom of a cycle, everyone says it is different this time round. And they are always wrong.”
He is probably right. The forces that shape markets do not change that much and the pendulum will swing eventually. What might give it a push? Power and Ensor both think that interest rate cuts will reawaken investors’ appetite for risk and will send them searching in less-frequented areas of the market. If rate cuts do arrive later in the year, it could signal the start of the next Aim cycle.