View more on these topics

Investment view

Never underestimate the importance of a single word. In this case, the

word is “temporarily”. Last week, I made reference to the fact that the

downward spiral in technology shares had abated, perhaps temporarily. The

addition of “briefly” would have made this statement accurate. Bargain

hunters did step in to snap up what they perceived as promising companies

at rock-bottom prices but the bears returned to give TMT a thorough

mauling. By the end of last week, the S&P Technology index was close to a

third off its peak.

There are a number of lessons to be learned. First, this serves as a stark

reminder that markets always over-react – in both directions. It was easy

to predict some reversal of the headlong rush into technology shares but

the trouble was guessing the point from which it would take place. Which

brings me to lesson two. The herd instinct remains very strong in markets.

Sheep-like behaviour is nothing new. Investors – particularly professional

ones -slavishly follow trends en masse and will probably continue to do so.

The trend may be your friend but the other old adage in the language of

technical analysis is that a trend is a trend until it stops.

The third lesson is arguably the most important but has little to do with

any on/off love affair with technology. Volatility is a fact of life and is

becoming even greater, with market swings condensed into ever shorter time

periods. There is no time to jump ship if your avowed intention is to wait

until the tide turns and then sell. Is there a message for private

investors and their advisers? It makes a case for taking the long view.

Unfortunately, taking the long view is not easy under present business

conditions. The world is changing fast and the real fun in e-commerce has

yet to begin.

We have passed the stage where the internet is simply a vast store of

information to be explored like the British Library with all the books

strewn over the floor in no order. The automation of transactions is upon

us, making it often easier, quicker and cheaper to buy goods

electronically. Next is the development of sophisticated search mechanisms

so the computer will do all the work for you in finding the cheapest motor

insurance or healthiest butter substitute or even, dare I suggest, the most

relevant financial product. This will allow some very serious sorting of

sheep from goats, with companies offering inferior products exposed

instantly. The turmoil facing Marks & Spencer is little to what we might

expect. So the long view may not be so long after all. At least active

managers are demonstrating that they can add value when markets stop moving

upwards with barely a pause. Whether they will succeed in making money in

these turbulent conditions is another question entirely.

It happened that last week I was in Leeds talking to IFAs on business

opportunities at one of Geoff Chown&#39s events. Geoff&#39s enthusiasm for this

much maligned industry of ours is a tonic at a time when disintermediation

is becoming something of a buzzword in the distribution of financial

products. Among the speakers he had gathered were a number on the

well-aired topic of the internet and what it means to business in general.

Alex Palmer of Intel had a brief and telling message to those who attended.

Believe the internet hype, he said.

I could not resist tossing the odd technology titbit into my session and

it struck me as being particularly significant that all the questions at

the end related to the brief round-up of markets I gave and, in particular,

rotation in and out of the technology sector. Business opportunities were,

it seemed, much lower down most agendas.

The award for the most asked question must go to “When is it time to buy

technology stocks again?” And that says it all really. There is a belief

that technology is the new emperor. My fervent wish is that the gyrations

we have seen will have brought a degree of realism back into markets. I

would hate to think the emperor has no clothes.


Consumer&#39s view

The Government should be very concerned at the findings of a report fromconsulting actuaries Towers Perrin, which reveals all too painfully thatthe current climate of uncertainty is slowly destroying the final-salarypension scheme.The most important aspect of the survey of defined-contribution schemes isthat “in over 50 per cent of cases, defined-contribution pension schemesare introduced in connection […]

Matrix aims for £20m with e-Ventures fund

Matrix Securities is aiming to raise £20m for its ven ture capital trustinvesting in e-commerce.The e-Ventures fund will make investments in fast-growing companies withproducts or services that depend on the application of e-business, theinternet or systems supporting the internet.The VCT has three years to invest 70 per cent of the fund.Minimum investment is £2,500. Annual […]

IFAP&#39s hotline brings in £13m for advisers

IFA Promotion&#39s consumer hotline generated between £7m and £13m ofcommission for IFAs in 1999, according to actuaries William M Mercer.The company also found the organisation increased profits for productproviders by up to £11m last year.The calculations were made using the results of a questionnaire which wassent to a sample of more than 8,000 consumers who […]

Fund stars shift orbits

Jupiter and M&G have been dealt a blow with the loss of star fund managers.Jupiter fund manager William Littlewood has ended speculation on whetherhe will return from his three-month sabbatical by retiring “indefinitely”because of chronic fatigue.M&G high-profile fund manager Nick Train is leaving just as the companycomp letes a merger with Prudential Portfolio Managers which […]

Solving the income puzzle

There is a puzzle at the centre of financial markets. The global economy is growing, there are signs of inflation and interest rates are going up, yet yields remain low. In this article, James Foster, manager of the Artemis Monthly Distribution fund, unpicks this conundrum and looks at where investors can find income. There is […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm