Heritage News
The stock markets continue to disappoint, however for those clients who make use of our bi-annual or annual investment reviews, we have strived to recommend well balanced portfolios that will help soften the downside to any stock market volatility. We can never guarantee that there will be no downside, but we can help minimise it. If you are not currently on our register for regular reviews, then contact me immediately to discuss your requirements.
Before I move onto more worldly matters, we are aware that a few clients, who make their own investment decisions, are making increments to their existing investments, by sending the top-up application direct to the investment house such as Skandia or Fidelity FundsNetwork. We are happy for you to do this but, in all probability, we will be paid commission. If you make your own arrangements and select your own funds, then send the application to us so we can process it without payment of any up-front commission.
The contrast between the buoyant Eastern economies and the lacklustre Western economies became even more marked during February. On the one side, the Chinese trade surplus rose 23% year on year to January while exports grew 26.7% and Indian industrial output also rose, up 7.6%. The high oil price boosted already-strong balance sheets in Russia and other oil producers. Japan delivered a surprise 3.7% rise in fourth quarter GDP on the back of strong exports to emerging markets.
The Western economies showed an altogether different picture. In the US, GDP growth slowed from 4.9% in the third quarter to just 0.6% in the fourth quarter. Even then, it was sustained by a surprising growth in exports, without which GDP would have fallen. The Eurozone saw growth of just 0.4% in January, after three months of 0.8% growth. Our problem remains the banking crisis. Credit Suisse announced a further $2.8bn in losses. However, despite a UBS report suggesting a further $440bn of sub-prime losses remain in the system, banking management was in optimistic mood, with many of the major banks declaring double-digit rises in their dividend payouts.
However, one black dog haunted both East and West – inflation. Chinese inflation hit an 11-year high at 7.1% on the back of higher food costs. Personal consumption expenditure in the US hit 3.7% to January 2008 and Eurozone inflation hit 3.2%.
Markets were broadly flat over the month after the large falls in January. They threatened a rally towards the end of the month, but gave up their gains on gloomy comments from Federal Reserve chairman Ben Bernanke in the last two trading days of the month.
You may have read my article on volatility in the Knowledge Base, where I explained the problems with the markets at the moment are more to do with negative investor sentiment than the underlying market fundamentals. There is a disproportionately negative reaction to any bad news that hits the marketplace at the moment, and a correspondingly lukewarm reaction to any good news. I believe consensus is slowly shifting back towards a more balanced appraisal, but further negative commentaries and or editorials may yet delay the likely resurgence.
As before, my advice will be to stand firm throughout this period. As long as you do not sell any units or shares and hold on to them, then you will be rewarded for your resilience. It is only the investor who sells at the wrong time that will make a financial loss. Now may also be a good time to look at your portfolios and check the performance of the individual funds. Are your investments performing as well (in comparison with their respective sectors) in the current market conditions as they were this time last year? If you would like to discuss your portfolios please ring the office on 01983 527111 and we will gladly arrange a meeting to discuss your options.
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