View more on these topics

Investment view

May was a month I would rather forget, spent in a haze of pain, drugs and hospital ceilings. The lacklustre markets of the past few weeks would have been a preferable experience. Make no mistake, though, recent articles from the pen of yours truly have been genuine. I was able to organise my absence with sufficient notice to cover a number of topics that had been bubbling at the back of my mind. True, my comments will have been a little less timely but should still carry a message for investors. Underlying fundamentals rarely change as swiftly as some would have you believe.

A wise old technical analyst once said to me that market timing is the most difficult element in portfolio management and is more down to luck than judgement. Perhaps in these days of instant information it is possible to make a living by second guessing market moves but, personally, I still consider there to be a powerful case for pound cost averaging.

There is an advantage in viewing market trends with enforced detachment. Themes emerge more clearly, even if many have been lurking in the background for some time.

Unsurprisingly, prominent among current burning issues is the strength of the price of oil. As the price rose above $40 a barrel, it became difficult for the word “oil” not to appear without Opec mentioned alongside. While this cartel of oil-rich rations is about to hold a meeting which will be closely watched, this connectivity appears overemphasised in my view. Opec&#39s influence is less significant on this occasion. Russia, for example, is now the biggest single oil producer in the world although it is also a big internal consumer, unlike the Opec countries. Furthermore, Opec is concerned with supply issues whereas it is demand that is fuelling this rise. It is arguable that a bigger problem is the current high utilisation of refining capacity. Whatever the causes, it is hard to see the price of oil falling significantly in the foreseeable future unless the global economic picture deteriorates sharply.

While the US motorist is making the loudest noise about the inequity of expensive fuel, current high demand is more about global economic growth – particularly in the Far East – than anything. Talking of the growing economic powerhouses on the other side of the world, the wild swings in Indian share prices as a consequence of the unexpected general election result, and the surprising subsequent developments on who should lead the legislature in the world&#39s biggest democracy, should not go unremarked. Economic power continues to migrate East. Investors ignore this at their peril.

Another story that grabbed my attention was the sharp hike in the steel price. Again, demand is outstripping supply and it is China that is being roundly blamed for creating these conditions, along with shortages in other raw materials. Imagine if US consumers stopped buying Chinese goods and the Chinese economy slowed dramatically. On second thoughts, don&#39t.

Back here, such company results as I have perused have been encouraging but markets have done no more than move sideways since the start of the year and investor confidence continues to be fragile. At the back of people&#39s minds will be interest rate policy in London and Washington while there is a growing concern that dearer oil could lead to higher inflation. It is at times like this that I wish share valuations were less stretched, particularly in the US. It could be an interesting summer.


Savills claims UK&#39s biggest mortgage at £15.2m

A £15.2m mortgage secured by Savills Private Finance is believed to be the biggest homeloan arranged in Britain. The businessman who took out the mortgage will have to pay £69,667 interest each month. However, repayments would rise to £82,000 if interest rates went up by 1 per cent by the end of the year, as […]

Ship&#39s home-reversion code &#39does not include compensation scheme&#39

Safe Home Income Plans&#39 final draft for the voluntary regulation of home-reversion schemes is understood not to include financial compensation for complainants. Sources close to Ship say the complaints procedure for the new code will include the possibilities of fining the provider, suspending it or terminating its membership of the organisation but there will be […]

Lockyer wants explanation from Standard&#39s Crombie on &#39cynical&#39 BBB comment

Berkeley Berry Birch chairman Clifford Lockyer is writing to Standard Life chief executive Sandy Crombie asking him to explain comments attributed to him in which he referred to “cynical” practices by BBB. Crombie, testifying before the Treasury select committee last week, criticised BBB&#39s move to wind up its subsidiary company Berry Birch & Noble Financial […]

Sofa offers FPC aid as it moves toward professional status

Sofa has agreed its strategic plan to the end of 2005 which it hopes will be the first step towards turning the advisory industry into a profession. The plan includes a review of Sofa&#39s membership proposition for all members and it will also introduce a new category for those studying for the FPC exam, to […]

The Downsizing Delusion: Why relying exclusively on your home to fund your retirement may end in tears

By Steve Webb, director of policy The British obsession with homeownership can have dangerous consequences. A recent survey by Barings¹ found that up to three million people of working age were planning to rely wholly on the value of their home to fund their retirement. We are not talking about people investing in buy-to-let or […]


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 thought leadership.

    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