Another month, another Eurozone rescue. The market rally over the past few weeks has done wonders for my net worth but it's scarcely to be trusted. Other investments are not looking too good: 3-4% in short and medium term money, probably about the same overall in index-linked bonds and around 5.5%, after fees and bad debts, in peer to peer lending, mainly Zopa.
This latter has not done so well lately, in the sense that rates have softened as a result of falling demand, so I have been pulling money out as it comes round for recycling. It does seem to be true that people are less inclined to borrow than they were. Good news, generally, but not so good for those seeking an alternative investment.
On the month, Sterling fell from €1.1623 to €1.1394 but rose from $1.5638 to $1.6130. UK 10 year gilt redemption yields rose from 2.31% to 2.55%, reversing a recent trend. Gold has resumed its upward path to $1735 per ounce. Brent Crude future rose from $104.20 to $110.05 per barrel, while copper recovered from $6905 to $8000 per tonne. The Baltic Dry Index rose from 1899 to 2013. Like most stock markets, the FTSE100 surged from 5128.48 to 5702.24 and the FTSE250 from 9819.39 to 10773.07.
Equity Portfolio (-6.93% on year, FTSE all share -3.86%)
The choppy rising trend this month has disinclined me to make any purchases or sales. If confidence in the economy were better, the market might be thought to be good value, but it seems to me unlikely that current company earnings can be sustained and I would not be surprised to see a crop of profit warnings being announced in early 2012, expecially for those companies without good Asian revenue streams.
This week's euphoric reaction to the Euro "fix" can't last. The writedown of Greek debt by 50% (still to be fully agreed, I think) is good as far as it goes, but it may have to go further, perhaps all the way. Moreover, the fundamental problem of uncompetitiveness is not fixed. The EFSF "leverage" sounds somewhat dubious to me and then there is the question of bank recapitalisation. All in all, surely, a recipe for more market FUD before too long. I bought equities when the FTSE100 was around 5000 a few weeks ago and I'll wait for that level to recur before spending any more.
Longer term (3-5 years), I remain bullish on share markets and am not generally inclined to sell unless there are exceptionally good individual performances.
0 comments:
Post a Comment