Following a strong upswing in March and parts of April, stock markets dropped in part strongly the last days. In the USA the S&P 500 index is down 6.6 percent since its peak performance in April, Europe is down 9.5 percent measured by MSCI Europe, whereas the Nordic countries have fallen back 5.8 percent measured by MSCI Nordic Countries. Locally, Oslo Stock Exchange is down 8.2 percent from its highest figure. Odin’s director of investments, Jarle Ulvin, comments on the developments.

What has led to the stock exchange unrest?
– Much of the unrest seems to be linked to the national debt problems in Greece. Speculations centre on whether the problems will spread to other countries or not. Next speculations relate to how much of a damper this may put on the growth in the world economy. The commodity and bank sectors have been especially hard hit. The latter is, as regards the USA, also influenced by the United States Securities and Exchange Commission (SEC)’s filing of charges against Goldman Sachs.

What is your view of the general macro-picture?
In my opinion, the general macro-picture is relatively stable. On Monday this week, for example, we received a long series of purchase manager indexes (PMI) from Europe and the USA for April. The momentum in these leading indicators is strong. The exception was China, where the PMI index for April dragged down – a fact that contributed to strengthen the downswing in the stock market earlier in the week.

How does ODIN relate to the unrest?
– In ODIN we manage equity funds with a long-term perspective. In that regard we react calmly to the debt problems in Greece. We do not believe that the debt problems will stop the ongoing global upswing.

What advice will you give to the shareholders?
– We appreciate the shareholders’ uneasiness when there is turmoil on the stock exchanges. However, fluctuations form part of the stock market’s nature – something we have to live with. Over time, the reward is an expected return that is higher than the one from bank savings, for example. Basically, we only recommend selling if you intend to use the money in the near future. For all others we recommend to sit through the unrest. Time and again this has proved to be the right strategy to achieve a fair return over time. If you need to have a supply of some money from month to month, you may consider a withdrawal agreement.

What do you expect the level of the stock exchanges will be at the end of the year? Higher or lower than today?
–We expect that the stock exchanges will be at a higher level at the end of the year than today. With that as a point of departure, this should also be a good time for shareholders to save a little extra.

The oil spill in the Gulf of Mexico has also affected the stock market. In conclusion, what do you think about that?
– The situation in the Gulf of Mexico is obviously serious until they manage to stop the spill. They will manage to do so sooner or later. In general we believe that several oil-service shares have taken a too hard beating at the stock exchanges as the result of this accident. The spill in the Gulf of Mexico will not lead to less demand for oil. The oil industry is still facing considerable challenges with a low reserve replacement, failing production and depletion of mature fields. Maybe this is the opportunity of the year to buy American oil-service shares.