Questions And Answers

Invest now and you will be catching a falling knife.

With £20,000 you should probably not be considering individual shares unless you know what you are doing and even then are prepared to take a loss, which in the last week has been 25% and more in some cases!

My company gives independent advice on collective investments if that's of interest.

I wish there were a simple answer. Any advisor would need to know more about you, your assets and liabilities, goals, risk tolerance, time frames etc etc.

But buying single shares is a mugs game. Read almost any academic paper in this field and it will tell you that prices are probaly fair re the risk involved and if not you have no way of knowing which way they are wrong; too cheap or too dear. Essentially the efficient market hypothesis seems to work, those who think its very effiecient don't seem to have found a way to consistently profit out of it.

You bear "specific" risk with one share i.e. the risk of it failing or doing exceedingly badly due to something for which there is no information available about at this time. BP being a good example, pre the well cap blowing off. If they owned all the oil companies they would have lost the specific risk and without looking at the data I'll bet they would have had similar returns in the long run.

If you are a speculator looking to day trade, there really are no advisors that can help you. Maybe stockbrokers will offer to but again the data I have read is their clients do no better.

If you want to invest in equities generally simply because the market has fallen off, well the fact is the expected rate of return from here on is higher than it was begining of May when the market was some 15% higher. The lower it goes the higher the expected rate of return going forward. So equities become more attractive the worse they fare. Whether this is the bottom or not is frankly unknown, whether you will have to wait 1 month or one year before the market rallies again no one knows, you may have to bear some more pain before the market moves forward.

I think that without advice, buying a fully invested FTSE All Share ETF to gain broad market equity exposure would be an infinately better bet than risking your capital on certain shares.

Our minimum client criteria is £250k of investable assets so I don't think we could be of much further help.

Hope this helps.

Hi Camilla

The FTSE100 as an index may well fall further, then again it may bounce tomorrow. Who knows. WHether the index is 'cheap' or not is not the issue here.

Start with considering how you see yourself in the market, i.e as a trader/speculator, trying to make money on short term trades, or as a serious long term investor focusing on investing in quality dividend paying shares.

Let us know?

Posted on behalf of Simon Willcox Managing Director at Blanchards Bailey Financial Services Ltd

Id probably look at buyng now as it seems very good value

http://wealth-management.wardgoodman.co.uk/wp-content/uploads/2011/01/WG-market-commentary-3rd-quarter-2011.pdf (cut and paste this address for an article on our thoughts)

Re Passive (Tracker) or Active (higher charges) we always advise our clients to opt for the latter. As an example from 19th August 2010 to now the FTSE 100 and therefore by definition a tracker fund would be negative 5% (approx) . Our active portfolios are positive 5% thus showing the difference.

If the markets is flat going forwards so will the performance of a tracker fund.

re who should you talk to : If you dont need avdice go direct if you do then a firm like ours would be happy to advise you.

Just my thoughts

Simon

Posted on behalf of James C Brandon

JCBCapital.com, JCB Capital Performance - Personal Wealth Management, Asset Manager, Financial Planner, Wealth Adviser

Hi Camilla,

Wall Street "Tsunami" caused by John Chambers (S&P) and company
only torpedoed global markets in the short-term with an "egregious opinion".

"By the morning of Aug. 5, rumors were rampant on Wall Street that the downgrade would come after the closing bell that day. Major stock indexes, which started higher on a better-than-expected jobs report that morning, were soon in negative territory, with the DJIA tumbling 240 points before rebounding to close modestly higher. The rumors turned out to be spot-on correct, as the downgrade was announced just after 8 p.m. ET. Now the Securities and Exchange Commission apparently wants to know where those rumors came from and how they spread." - CNN

Office of the Whistleblower - Authorized by Congress to provide monetary awards to eligible individuals - awards between 10% and 30% of the money collected.
(202) 551-4790 http://www.sec.gov/whistleblower

S&P downgraded:
- U.S. Treasuries from AAA to AA+ - 2/3 of global reserves (IMF)
- Fannie Mae, Freddie Mac, the Federal Home Loan Banks - U.S.'s residential mortgage funding
- U.S.'s 4 Clearinghouses - processes all U.S. stock, bond and fund Exchange transactions
- 744 U.S. Federal, State and Agency bonds - U.S.'s structured finance transactions
- 11,500 U.S. Muni***l bonds - U.S. retiree's savings and pensions.

Consequences: Global markets lose nearly $9 trillion from $55 trillion (7/26) to $46t (8/10). In fear global money buys U.S. Treasuries (dismissing S&P's opinion): 2yr Treasuries trade 0.15% (8/9), 10yr trade 2.03% (8/9) and 30yr trade 3.45% (8/9). Long-term U.S. consumer borrowing rates to rise, pushing Americans toward recession, and prolonged U.S. unemployment.

Credit Rating Agency Reform Act of 2006 says that a credit rating agency can have its license revoked "if it leaked information about its pending downgrade decision before making that information publicly available". Senate Banking Committee to investigate "insider trading" and "violations of the law - " at S&P.

Those who understand and work in financial markets have "totally dismissed S&P's analysis" and are questioning current U.S. laws that have provided this "abuse of moral authority". There is an "army of ignorants" voicing opinions they "regurgitate from watching TV and listening to Radio" - they have "no ability to provide any analysis of this egregious opinion by S&P on AUG 5".

JC Brandon
Links:

http://www.JCBCapital.com

Clarification added 8 days ago:

How is S&P's behavior any different from that of Lehman Brothers or AIG?

S&P discarded any semblance of "rationality" in opining that America is more likely to default than other sovereigns based on "politics" - S&P is not licensed as a "political activist" they are licensed to provide a financial opinion as to "default risk".

Not unlike Lehman Brothers and AIG that left investment banking and insurance (respectively) to "speculate on ever increasing prices of future U.S. real estate" - their malfeasance (greed of self-interest) caused global damage and the current U.S. recession.

To defend S&P is defend a miscreant that lights a fire under the chair of the person sitting in front of them in a movie theatre (because they are talking before the show) and subsequently burns down the theatre - "killing all the innocent attendants and their children."

How can "Ignorants" defend an action which costs 1) global markets to lose nearly $9 trillion, 2) has damaged U.S. sovereign debt, 3) has damaged U.S.'s residential mortgage funding, 4) has damaged U.S.'s clearinghouses which processes all U.S. stock, bond and fund Exchange transactions, 5) has damaged U.S.'s Federal, State and Agency structured finance transactions, and 6) has damaged U.S. retiree's savings and pensions for their retirement?

Which "Ignorants" want to step forward and defend an action which damages the long-term rates U.S. consumer will pay to borrow, pushing Americans toward recession, and prolonging U.S. unemployment?

JCB