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Rathbones: Prioritize Protecting Gains, Not Aggressive Returns

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  Published in Stocks and Investing on Wednesday, January 14th 2026 at 13:54 GMT by This is Money

London, UK - January 14th, 2026 - With stock markets enjoying an extended period of strong performance, investors are understandably questioning whether the current valuations still offer opportunities or if a correction is looming. David Coombs, Head of Multi-Asset Investment at Rathbones, a prominent UK investment firm, has issued a cautious but pragmatic assessment, urging investors to prioritize protecting their gains rather than aggressively pursuing further returns.

Coombs, who has managed Rathbones' multi-asset investments for 14 years, acknowledges the impressive run the market has experienced. "The market has had an extraordinary run," he stated recently. While acknowledging the recent positive trend, his advice centers around a measured approach, recognizing that extended periods of growth are rarely sustainable.

The Current Landscape: High Valuations, Persistent Growth

The central question weighing on investors' minds is whether there's further upside potential. Coombs admits that it's challenging to predict further gains, emphasizing that valuations are currently elevated. However, he tempers this concern by pointing out that the market isn't operating at the unsustainable levels seen during the dot-com bubble era.

Several factors are currently mitigating the impact of high valuations. The historically low interest rate environment continues to provide support to asset prices, and corporate earnings have demonstrated surprising resilience, acting as a cushion for equity markets. This combination has created a relatively stable - albeit potentially fragile - environment.

Identifying the Risks: The Spectre of a Correction

Despite the current stability, Coombs highlights the ever-present risk of unforeseen shocks. These shocks could manifest in various forms, including sudden shifts in inflation expectations, unexpected geopolitical events, or even a rapid change in investor sentiment. He emphasizes that the prolonged period of relative calm has lulled some into a false sense of security. "We've been used to a very benign environment for quite some time now, and it's possible that we're overdue for a correction."

The possibility of a market correction, though not imminent, requires a proactive response from investors.

Protecting Your Portfolio: A Diversification Strategy

Coombs' core recommendation revolves around a cautious investment strategy focused on preserving existing profits. The cornerstone of this strategy is diversification. "Don't put all your eggs in one basket," he advises, stressing the importance of spreading investments across diverse asset classes - equities, fixed income, real estate, and commodities - and geographical regions. This reduces exposure to any single source of risk.

Beyond diversification, Coombs advocates for a selective approach to company selection. Investors should prioritize high-quality companies exhibiting several key characteristics: robust balance sheets, consistent cash flow generation, and a demonstrable history of profitability. He cautions against investments in companies carrying excessive debt or those overly reliant on a single product or service. These companies are particularly vulnerable to market downturns and economic shifts.

Finally, Coombs reinforces the importance of a disciplined approach to profit-taking. He advises investors to capitalize on opportunities when they arise, prioritizing tangible gains over unrealized paper profits. "It's better to have a smaller profit in your hand than a large one on paper." This proactive management of returns can help weather potential market volatility and ensure long-term financial security.

Looking Ahead: A Measured Approach for 2026

As the market continues to navigate uncertain economic conditions, David Coombs' advice offers a valuable framework for investors. A cautious, diversified approach, focused on protecting existing profits and prioritizing quality investments, appears to be the most prudent strategy for navigating the potentially turbulent waters ahead.