Five noisy jays flying past my window on Maundy Thursday morning remind me of the old nursery rhyme which starts as above and continues…three for a girl, four for a boy, five for silver….. But in current investment markets few people feel like doing anything to get to the next bit…six for gold. We all like to think that we are logical, intelligent, rational etc but in times like the present, we are just as emotional and illogical as any herd of animals. People are reluctant to invest now when things look gloomy and when by some parameters shares are cheap. But we will happily wait until the Stock Market i.e. the same investments, are maybe 50 per cent higher and put our hard-earned money in then or often finally get in just before the bubble bursts. Other IFAs tell me that some clients are putting off investing as things might get worse but I have yet to see any investment pundit who ever got the bottom of the market right.
Sadly, one man who did get the bottom of the market was our dear Prime Minister Gordon who sold off half the UK’s gold reserves at US$ 275 an ounce a few years ago. The price has been climbing steadily ever since and is now over US$1,000 an ounce. In a classic example, of people getting in at the top of a market, another IFA tells me of a client who wants to buy gold for their ISA.
If you believe what you read in the Press, the gloom in the housing market gets worse by the day and as a perfect example, a friend who was top salesman in a firm of central London estate agents and did far more business than the director/owners, has been laid off. But in a sign of the times, he wisely took an employment solicitor along to his final meeting with them, as there is lot of commission from his deals still in the pipeline. I look forward to seeing him opening his own firm in the not too distant future.
At the same time, another property investor tells me of an auction property which needed a lot of work and had a guide price of around £500,000 which went for nearly £800,000. They also point out that there do not seem to be so many make money from property programmes on television these days. But there are still plenty of people offering courses for this at several thousand pounds a time.
In any event, living standards are set to fall over the next few years partly because of economic recession or depression (take your pick) and of course, higher taxation which does not bode well for the housing market. Home Information Packs costing several hundred pounds could not have been introduced at a worse time. With lenders now running scared (stricter lending criteria) on one hand and without access to cheap or even reasonable money on the other hand, the volume of property sales is set to drop drastically. The most amusing example of this is one part of Docklands where I am told there are more estate agents offices than properties for sale.
On a more cheerful note, some colleagues take a day off to visit Portsmouth to see H M S Victory
http://www.hms-victory.com/ If you have ever wondered where phrases like: taking something with a pinch of salt, being on the fiddle and slush fund originate, the guided tour will explain.
Just when I have forgotten my exotic diet in Thailand http://www.georgeemsden.co.uk/?p=116 Alex in the Daily Telegraph on 12th March 2008 reminds me http://www.telegraph.co.uk/money/Alex/pAlexTemplate.jhtml;jsessionid=1JFJITRVUWZUTQFIQMFCFFWAVCBQYIV0?pTitle=Alex.Telegraph but the fried bees or wasps larvae will have to wait for my next visit to Thailand.
Financial Journalist Lorna Burke pitches in to the pensions debate with a call to end compulsory annuities http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=299210 With the rate of return available from pension annuities similar to the rate from income funds, many people feel that they are a rip-off. Anyone who is offered say 6 per cent for their pension fund where they give the capital away to an insurance company but can earn the same amount with a portfolio of low-risk investments and keep their capital is bound to feel a bit aggrieved.
Unsurprisingly, in2 Consulting has done a lot of this type of business over the years. Where clients for example, have perhaps sold their businesses and who now have a serious amount of cash, want a better return than available from cash deposits but without the volatility associated with shares, a portfolio of dull and boring funds which chug away at around 7 per cent a year, is quite attractive. I also know of IFAs who no longer sell pensions for retirement planning and in a memorable quote, one said to me, Annuities are Theft!
For a change, I will finish on a sporting note and anyone with an interest in football who feels that the millions going into The Beautiful Game have rather spoiled things, maybe interested in this review http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2008/02/21/sobook121.xml
A Happy Eastertide to you all.