Don’t rely on the St Leger

by | Aug 3, 2015 | Professional | 0 comments

Introduction

Hello and welcome to Living Money’s Manifesto for Monday 3 August 2015.

I am Jeremy Deedes, financial life planner with over 25 years experience in financial services, author of Right Money, Right Place, Right Time and founder of Living Money.

Summary

In days of old stockbrokers had a saying – sell in May and go away, come back again on St Ledger day. The first part certainly worked this year. Since the beginning of May markets have fallen not a little bit, although they stabilised in July. The question is, will they come back on St Leger Day, the 12th September.

Frankly, being on a English racecourse this summer probably provides better clarity than trying to read the markets, which are still divided over the usual conundrums:

  • What are the prospects for global growth, and the outlook for the US, China and Japan in particular
  • When will US rates rise, which arguably they should already be doing as employment strengthens and inflation becomes a real threat, whilst others argue the strong dollar is already doing the Fed’s job for them
  • Whats happening in China, whose stock market is still up 70% over the past year, and down 25% in the last few months, a degree of volatility partly self-inflicted by the China Government
  • Greece, whose can has been kicked down the field yet again and will take a generation or more and some radical thinking to sort out
  • Where do commodities go, in a world of weak global demand and a strong dollar, both of which have led to a collapse in commodity prices

In a world of uncertainty and lack of clarity markets are going to remain volatile and uncertain. Frankly, at this stage there seems little point in rehashing the arguments and so I am going to do what any good stockbroker would have done and keep this short, give you a quick overview of markets in July and go away, if not until St Leger Day, at least until the end of August.

Markets in July

Some stability in markets after falls in May and June

  • Japan 0% (Topix)
  • FE -7% (MSCI Asia)
  • Euro -2% (S&P Europe 350)
  • UK FTSE 250 +1%
  • UK FTSE100 +2%
  • US +2% (S&P 500)
  • Oil -18% to $48.5
  • Gold -7% at $1,088

Bottom line

A ‘balanced’ portfolio has probably dropped around 3.5% since the beginning of May. A more aggressive one will have dropped further although this should not be a cause for concern. Markets are volatile by definition and if you want to understand more about stockmarket volatility and returns then I would refer you to Chapter 7 of my book, Right Money, Right Place, Right Time, where you will also find help on how to structure your finances to ensure they support your life’s ambitions rather than hinder or hijack them.

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About Living Money

cropped-Living-Money-logo-600x600.jpgLiving Money coaches busy families in personal finance. We are not authorised to provide financial advice and we do not recommend financial products. Instead, we aim to provide you with the tools and skills to buy the financial products that will best serve your life and money.

That’s it from me. Thank you for listening.

Have a very good week. Take care and go well.