Thursday 30 December 2010

A380 Build Rate and Rolls-Royce Trent 900 Rate Readiness

Found a newsreel article on the Aviation Week website regarding deliveries of the A380. Airbus has fallen short of its reduced delivery target of 20 aircraft in 2010 due to Trent 900 deliveries from Rolls-Royce, for the 20th aircraft, being impacted by the Quantas in-flight failure. 
Ironically, this aircraft is destined for Quantas and will now be delivered in the first weeks of 2011. A further aircraft for Singapore has also been deferred due to business class seat shortages.
But, the article goes on to detail an Airbus statement which reads as follows:

"In a note to employees, Airbus CEO Tom Enders notes that by “implementing the operational improvement actions we decided a year ago, we have achieved huge progress on the A380 program this year. Outstanding work and lead-times in our [final assembly lines] have been reduced considerably, production costs have come down and our ramp-up from two to three aircraft per month is well underway."

So, taking the positives from this statement, Airbus are close to a build rate of 3 per month and with approx. half of 2011's planned deliveries being Trent 900 engined, that is an average 6 engines per month required from Rolls-Royce.
Elsewhere, Airbus should still achieve a record 500 plus aircraft deliveries in 2010 (461 as at 30 Nov), and have taken 50% more orders than expected so, with Boeing having also delivered 386 aircraft (as at Oct), the Aerospace sector is sounding healthy despite the 787/A380 issues.

Link to Aviation Week 

Wednesday 29 December 2010

National Grid, LNG, and Portfolio Diversification!

Interesting read on the Guardian website today re. National Grid and the importing of Liquified Natural Gas. The article relates a visit to the company's new terminal (the world's largest outside of Japan and Korea) which, it is estimated, can supply up to 20% of the UK's annual demand.
The UK now has 3 terminals in total which should be able to supply up to 50% of annual demand but the article goes on to forecast that by 2020 the UK will need to import 70% of its annual demand from all sources ie the pipelines and LNG terminals. 
According to the International Energy Agency there is an unexpected global gas glut that could last for a decade as new means of producing "unconventional gas" from coal seams and shale are found. It also seems that oil companies such as Shell will soon be producing more gas than oil for the first time.
However, the article quite rightly maintains that there is still significant risk to supply from price competition. 
But, interestingly for me it groups a number of my investments together as having significant stakes in the same immediate future, these being: BP, BG, Centrica, Scottish and Southern, and NG. Each company does have other strings to their bows, but finding, recovering, and supplying natural gas, in one form or another, does have a significant impact on their viability and profitability and as it stands each company is only one link in the total energy supply chain. 


So, it is worthwhile considering this in the context of portfolio diversification as it may be that holding these 5 companies or similar is not really diversification at all. Although, on the flip side it is a significant group holding in a finite, indispensable commodity albeit one that is in a "temporary" global glut. 
That being the case it also stresses the need to look at these investments strategically as long term investments, at which point consistent earnings and dividend growth become very significant as a regular means of shareholder returns alongside potential, but longer term, capital growth. I will look at this further later but of the 5, 4 are in my Value, Income and Recovery portfolio and 1 is in my Growth and Speculative.

The Guardian article on National Grid's LNG terminal can be found through the following link:

http://www.guardian.co.uk/business/2010/dec/27/lng-transforms-uk-gas-supplies

Friday 24 December 2010

FTSE closes at 6008.92 but....

Well the FTSE closed at 6008.92 but taking a look at the chart it looks more of a technical / sympathetic reason rather than any shift in fundamentals or investor optimism. As you can see there was a steady deterioration in the index until minutes or seconds before the close at which point 2 spikes took the index above the 6000 mark so possibly some tidying up of trades before the close.


Touching 6000

Can't see too much going on today or next week in thin distracted trading conditions. 
Apparently, the index touched 6000 before falling back at yesterdays close. However, unless there is some key news I can't see too much in the way of normal trading conditions until the New Year which will give me time to look at my portfolio ahead of 2011. 

Looking ahead into 2011, I can only see the FTSE hitting the ground and stumbling initially as mixed retailer success due to the weather conditions, is combined with the planned increase to VAT on January 4th. Inevitably, the trading statements from retailers will drift between weather related excuses, a few decent trading days and a gloomy forward view.

Happy holidays to one and all and may you all have a prosperous New Year.

Note: You could look out for Vince Cable on this years Strictly Come Dancing Christmas Special as he wages war on the competition. Lets see if he accepts the verdicts of the judges?

Thursday 23 December 2010

Oil Price above $90!

I see that faster than expected falls in US crude supplies has pushed the price of a barrel above $90 for the first time since October 2008 boosting the share prices of BP and Royal Dutch Shell.


FTSE 100 standing at 5993 +9.89. Not sure if I want to see it top 6000 if it is just going to deflate, which can be a problem with these targets/psychological barriers. Probably depends on where Wall St. opens now to give the FTSE the momentum to push through.....and stay there into the New Year.

Wednesday 22 December 2010

Wed 22 Dec: National Grid opening higher

9:00 First log in this morning and I notice some very odd movements on National Grid. It could be a residue of trading from yesterday and/or market makers but it looks like the first big trade of the day went through at 8:00am: 719,000 shares sold at 590 which suggests that NG opened at +26p! 
By 8:05 the price had settled to a more normal 5.71 +7. 

Elsewhere lots of opinion around sovereign debts with The Daily Telegraph reporting that Citigroup (our star broker yesterday), is warning that the EU needs to come up with a credible plan. It goes on to report that "Prof Willem Buiter, the bank's chief economist, said the eurozone was paralysed by a "game of chicken" between the European Central Bank and EMU governments". Always nice to see these guys put their reputations on the line by stating the bleeding obvious! 
On a serious note, it is a huge ethical concern for me that with the banking industry having had such a key role in causing the crisis, and continuing to to be a major beneficiary in any recovery these kinds of comments always sound like they are prodding someone else for the solution rather than being pro-active and contributing to one.

Unhappy Sky Subscriber! 

Closer to home: Vince Cable could well have lost the halo of credibility that he wore during the election campaign with his unguarded comments on Rupert Murdoch's attempt to take full control of BSkyB. His concerns could well be valid but having been secretly recorded the suggestion is that he may have a "personal" agenda which obviously affects his impartiality in any BSkyB decision. Who knows, he might just be a concerned Sky subscriber exercising his opinion so it will be interesting to see if Sky loses his subscription should any take over occur (doh!). 
Anyway, joking aside, BSkyB is currently 744 +15 following news that Vince Cable has been taken out of any decision making process on the takeover. 
It is starting to look all to easy for Mr Murdoch as the obstacles to take over appearing to remove themselves.

At the close:
  • the FTSE 100 finished at 5983.49 +31.69
  • NG closed at 573.5 +9.5
  • BSkyB closed at 743 +14.5

Tuesday 21 December 2010

STOCKS NEWS EUROPE-Rolls rises as Citi upgrades to "buy"

For all you R-R watchers out there a broker upgrade from Citigroup coupled with a price upgrade from Deutsche has boosted the share price today.

Tue 21/12/2010 08:51
""Shares in Rolls-Royce
RR.L gain 1.4 percent, among the strongest risers on Britains blue-chip index .FTSE , after Citi upgrades the aerospace engineer to "buy", saying that the company has a strong outlook and looks to be good value after recent underperformance.
"We have raised our underlying EPS forecasts to reflect faster than previously expected recovery in civil aerospace and higher profits in Marine, following the 3Q IMS statement," the broker says in a note in which it raises its price target to 760 pence.
Deutsche meanwhile, raises its price target on Rolls Royce to 665 pence from 550 pence in a note on the aerospace and defence sector, though it maintains its "hold" recommendation. ""
Reuters Messaging http://uk.reuters.com/article/idUKLDE6BK1UB20101221?pageNumber=2

Monday 20 December 2010

FTSE touched 5900 today!

FTSE touched 5900 today, pushing 2.5 year highs, despite the drag of snow affected retailers and BA woes. 
Lots of additional negative sentiment surrounding Korea and Sovereign debt as well. 

Positive statements from National Grid regarding available gas supplies put a bit of a spurt under the shares which broke the recent downward trend that has been in place since the shares went ex dividend on the 1st December. The benefit was also felt by other utilities incl. Centrica and Scottish & Southern. All 3 companies are held in my portfolio for Value and Income with prospective dividend yields of: 6.6%; 4.2%; and 6.3%.

Elsewhere, it looks like RBS has temporarily avoided a head to head with Vince Cable and George Osborne with the latter stranded in New York due to the weather. If media reports are true then it looks like RBS will push on with its plan to pay bonuses in excess of £1bn to employees. 
The results of the industry's bonus driven malpractices prior to the credit crunch are still very much in evidence as illustrated by the recent Lloyds announcement that further write downs for debt defaults will be needed due to Ireland's woes and, despite not receiving the same degree of assistance, Barclays is significantly exposed to any further weakness in Spain's position.
In light of continuing sovereign debt concerns and possible retaliatory action from the government over bonuses, I struggle to understand why the bank sector went up today, albeit slightly, unless it is on the back of the CBP report forecasting interest rate increases next year!

I also noticed last week that, with very little fanfare, RBS unloaded its Chinese operations with no financial benefit transferring to RBS. Once of a day this was the key reason to invest in RBS as the future driver of growth for the group.

Anyway, it still looks to be  too early for me to delve back into domestic banks despite the obvious gearing to global economic recovery.  Both, HSBC and Standard Chartered have obvious far eastern attractions but are also fully valued with little leeway for failure now.

Friday 17 December 2010

Globally Diversified Technology, Growth, and Hedge portfolio!!!

Had an unexpected dividend drop into my portfolio this week - wahey.
Over the last 12 months I have diversified my portfolio with 3 investments in the US. This was driven by a number of reasons:
  • diversification out of the UK
  • hedge against a weakening £
  • growth at attractive valuations
  • highly profitable, cash rich brands that set trends and drive global markets  
At times the US seems to be a self sufficient market place that sets the pace for the rest of the world. The FTSE regularly seems directionless until Wall St opens giving substance to the adage that "when Wall St sneezes, the FTSE catches a cold". 
So to my Globally Diversified Technology, Growth and Currency Hedge portfolio! (I don't think so either). The shares have been bought principally for Growth its just that the US markets seemed to have much more value in them than the FTSE.

Anyway, my investments were in:
  • Apple on the back of IPhone sales and ahead of the IPAD being announced to the world
  • Microsoft on the back of Windows 7 roll-out, and XBox Kinect
  • Cisco which provides the technology behind the mobile networks that are creaking under the weight of smart phone data traffic.
All 3 are cash rich leaders in their fields and are seemingly good value compared to UK technology companies. Funny old thing but the likes of ARM, and Imagination Technology provide technology that drives the feature sets in many of these devices but do not generate the same profits as the above and yet seem hugely more expensive on all valuation measures (I will explore these comparables another time).
On the downside, Technology companies generally don't have the same focus on dividends and of these, despite the cash piles: $11.5bn; $5.5bn; and $4.5bn respectively, only Microsoft has a dividend policy and that being 2%.
Cisco has been the underperformer following missed growth forecasts which resulted in the shares giving 15% of their value.
But, the biggest disappointment is not in the Portfolio itself but in not being able to add Google to the portfolio with its shares having surged 30% in the last couple months as I hesitated. 
I have to say that I am pleased with the way these investments have performed and look forward to further returns.


% Gain
Apple67.34%
Microsoft18.87%
Cisco-1.45%

28.25%

Gains have been measured using $ thereby excluding exchange rates until such time as the investment is realised. For the record exchange rates have been slightly favourable.

Please note that: Before investing in US stocks for the first time you will need to complete and return form W8-BEN to your broker. This enables UK investors to claim exemption from paying US tax on dividends and interest from shares traded in the US, as such income will already fall under UK income tax rules. 
The shares can also be held within an ISA.

Thursday 16 December 2010

Swings and Roundabouts.

Strange day in the market for me that finished level despite the nervous start to the day brought on by BP.
Lots of ups and downs news wise with but with the disciples awaiting an outcome from the EU summit on the sovereign debt crisis I can't imagine that there will be many brave bulls out there. 
Closer to home the British Retail Consortium announces that retail sales in November rose less than expected (give me a break), less than expected by whom - someone on a beach in Australia. Anyone with a window or a TV will know that the weather has once again brought the UK to a halt and that retailers are already pinning their hopes on extended opening hours and heavy discounts to recover the lost weekends!

Looking ahead the BRC is already flagging up a difficult start to 2011 as the planned VAT increase and other austerity measures hit home. I have had to have a chuckle at the supporting statement though:
"The sportswear retailer Sports Direct became the latest firm in the sector to warn of difficult times ahead. While trading has been strong this year it says that it is ‘anticipating a tough start to the New Year.
Is that in reaction to Chris Hughton's sacking? Ha, ha.

BumPy ride: BP Shares down 2.6%

Wow, that didn't last long. BP shares down 2.6% as soon as the market opened on overnight news that the US Gov't has filed a lawsuit against BP and 8 other defendents under the Clean Water Act.

I guess that the dividend re-instatement won't be any time soon then. I need to consider this latest news in the context of BP's recovery and along side the reference I made to Exxon in the previous blog.
Not sure what this says about the US Gov't. Unless we have been mislead, BP have worked transparently and complied with the clean-up operation and the administrations guidance on compensation and clean-up costs?

The summary on Sharecast states that:


"Fines could exceed $21bn (£13.4bn), on top of the $30bn BP has already paid in compensation, if it is accused of gross negligence and this is proven. Damages are being sought under the Clean Water Act, which prohibits the unauthorised discharge of oil into US waters, and allows the US to seek damages of $1,100 for each barrel of oil spilled.

“We intend to prove that these defendants are responsible for government removal costs, economic losses and environmental damages without limitation,” said US Attorney-General Eric Holder.

“Even though the spill has been contained, the department’s focus on investigating this disaster and preventing future devastation has not wavered.”

Assistant attorney-general Tony West said: “We have not asked for damages at this point because it’s going to take years to fully quantify what the damages are.”

BP responded to the filing of the lawsuit, saying: “The filing is solely a statement of the government's allegations and does not in any manner constitute any finding of liability or any judicial finding that the allegations have merit.”  

London (Sharecast)

Wednesday 15 December 2010

Value, Income and Recovery: BP

The most recent purchase to my "Value and Recovery Portfolio" appears to be bedding in well. The Value part of the portfolio may not meet the strictest definitions of investment criteria but I am one of those who feels that the last couple of years will prove to be a great opportunity that will "literally" pay dividends for years to come.
The objective here is to retain a low maintenance core of holdings that will return me a valuable dividend income stream each year whilst still having the fundamental financial strength to grow its profits and dividends in the future relative to my initial investment.
The high probability of a recovery in the share price provides substantial icing on the cake whilst minimal trading will control my "management cost".

Remember my earlier comment about being wary of new paradigms, well the tech bubble was built upon the "sandy" idea of buying companies that would take years to make a profit (if ever), which left multiples of sales as the only measure relevant to investors. Debt levels were dismissed by those suggesting this new paradigm but wages and costs still needed to be funded by the growing herd of followers looking for the promised land (pyramids optional).
As more were persuaded to join the flock (for fear of losing out), the money flowing in became the only thing driving up the values of these "back of a fag packet" start ups. Predictably, anything with ".com" at the end of its name had investors throwing money at it as they sought to get on board the next big thing having missed out on the last one and being reminded by their peers.
Consequently, the value of so called bricks and mortar businesses fell significantly despite increasing profits and tangible dividend yields in excess of bank account interest (sound familiar). However, once the smoke was blown away from the reflecting surfaces, making profits, rather than imagining them, came back into fashion and those profitable companies came back into demand as the tech bubble imploded.

My view is that once the pain of the current situation becomes a memory, albeit a painful one, then a measure of order and forward looking will return to the market.
I do have to admit that the greatest opportunities at the bottom of the market passed me by as I hid away paralysed by fear as seemingly all rational thought and behaviour left the markets.

Anyway, looking around the markets today, there are still companies with significant brands,  presence, and history to influence our social behaviours and lifestyles both on a national and global scale. Many of them still seem to be on valuations at attractive discounts to where they would be if "sentiment" was more positive, as opposed to the general feeling of pessimism that is stalking the global environment jumping on any optimism. Recession and "we're all doom'd" are the only soap boxes in town it seems.

These brands and companies won't be sinking in the malaise, instead the questions being raised in every boardroom will be "what are the opportunities and how can we maximise them?" or "how do we adapt, and become more lean and efficient to protect our cashflows and profitability". I can't think of a single business leader worth his salary who will accept "there's a credit crunch on" as an excuse for not responding to the changing situation (except Banking of course where bonuses are seemingly paid out regardless).

Coming back on track, my latest investment is in BP.
Principally, this is on the back of an anticipated recovery in BP as it resolves the Mexican Gulf disaster and ensures provision is in place to meet liabilities.
The company has made significant progress in putting this provision in place by divesting non-core assets that in the company's words "may be of greater value to another operator" and with £13bn now raised against a £19bn year-end target the company is well on its way to doing what it said it would do.
A new broom at the helm, as Tony Hayward bore the brunt of the PR mismanagement, will also help perception.

With substantial intelligence as to the scale of the disaster and the cost to BP, the company at 473p is on a forecast 6.8 times P.E ratio for this financial year. This is still a substantial discount to Royal Dutch Shell (10.8 times and 5.3% yield) and global peers like ExxonMobil (12.4 times).

With a potential restoration of the dividend as early as February 2011 and returning credibility there is likely to be growing momentum behind BP's recovery particularly if the price of crude oil continues to rise with global demand (currently at a 2 year high of circa $90 a barrel).
At the end of the day, BP is still a major player in an essential commodity with limited and restricted availability until alternative fuels and technologies are developed and economically viable. Should the company close that discount to RDS by just 25% then that will put the share price at 540p, a gain of 14%. 

There is also mileage in the view that if the BP brand is beyond repair in peoples perceptions then it will likely be taken over. But, in comparing BP to its peers we have to consider the Exxon Valdez disaster that affected Exxon and, more recently, the reserves debacle that Royal Dutch Shell found itself trying to contain.
The footnote lesson from history being that both companies have recovered. However, in the case of Exxon, although the Valdez disaster took place in 1989 it has only just completed paying for that disaster some 20 years later.

Anyway, when making purchase decisions over the last 12 months I have attempted to discipline myself to "buying on the dips" as opposed to the peaks, preferring to miss out on some investments until another opportunity arrives.
Inevitably, there will be dips in the market so I have tried to let the market follow a 2 or 3 day fall before investing. Picking up on Warren Buffets allegory of Mr Market, the philosophy to follow is to:
            
                "be fearful when others are greedy, and greedy when others are fearful!"

In the case of BP, I wasn't brave enough to call the bottom (not even in the same time zone), but the timing of my investment followed the renewed fears of sovereign default in the wake of Ireland's rescue package giving me a 10% gain relative to today's price.
So, in conclusion, BP is in my Value and Recovery Portfolio in anticipation of share price recovery and the restoration of a dividend, which will then cement its place on merit.

Push me, Pull you.

US markets were up in early trade on the back of better retail sales but finished down after a cautious Fed statement noted the sluggish recovery.
Consequently, the Fed have kept interest rates on hold and will push ahead with its additional $600m stimulus package.
Funny old thing sentiment. It was less than a month ago that the announcement of this same  stimulus package turned the US markets up following a few days of lower closes as concerns about the recovery grew...hmmm, just wondering which side of the bed I got out of this morning?

Tuesday 14 December 2010

US Interest Rate meeting.

Following close behind the recent Bank of England MPC meeting the US Federal Reserve will make an announcement later today on the state of the US economy and any interest rate decision. Personally I wouldn't expect any changes ahead of the meeting on President Obama's recent decision to extend tax breaks to middle America.

Other news related to the MPC decision to leave rates on hold. The mickey mouse CPI inflation figure rose "unexpectedly" to 3.3%. The unexpectedly part being due to the expected VAT rise to 20% which doesn't take place until 4 January, but is expected to trigger a further increase in inflation.
What is the chore brought on by this failure to maintain inflation at 2%..... a letter to the Chancellor!

I would suggest the "unexpected" need to take their blinkers off re. the MPC's "in"credible handling of interest rates if they have confidence that the MPC can stoke the economy whilst controlling inflation. Personally it feels like they are re-stoking the conditions that gave fuel to the credit crunch in the first place.

For reference the truer RPI measure rose to 4.7%, so well done to anyone who has managed to stay invested in the NS&I Index linked savings certificates. With no new issues the NS&I Index Linked savings certificates are closed to new subscriptions but existing holders should think hard about rolling over their investment when the anniversary arrives. I for one will be doing so in a product that has served me well.

London Stock Exchange: dates closed over Christmas 2010

The London Stock Exchange will be closed on the following days/part days over the Christmas break:

Fri    24  2010 Dec Part day closed from 12:30pm
Mon 27  2010 Dec Closed
Tue  28  2010 Dec Closed
Fri    31  2010 Dec Part day closed from 12:30pm
Mon 03  2011 Jan  Closed

National Grid"locked"

Noticed an article on Friday which built upon the Thurs National Grid announcement that they had sold a part of their American assets. The article suggested that NG continues to have problems with American regulators around requested price rises with approved increases being discounted by 50% or more. The upshot being that the UK operation has margins up to 3 times that of the US operation enabling infrastructure investment and upgrades.
It also proposed that NG should consider selling out of the majority of its US operations to concentrate on the UK. In addition, these asset sales could help to contribute to the proposed 5 year infrastructure investment program that led to the recent rights issue.
The article went on to suggest that divesting its low margin, politically constrained US businesses would unshackle NG's share price to some degree.
It will be interesting to see how this unfolds given the concerns over NG debt levels.

In other news R-R fell yesterday on comments from Airbus' (EADS) Chairman that R-R could have been more pro-active with its communication on the A380 incident, his concession that this could only be done on the basis of facts being lost on the audience.

Friday 10 December 2010

R-Rumbling On.

As feared R-R's limited assessment of liabilities and external estimates are starting to veer apart as analysts finally start to look at the potential hit on future years and not just the November incident. Worry for me is that this is again speculative and lacking in the detail that R-R could provide. Up to now company statements have only referred to an impact to this years profits with no indication if provision needs to be made for the future or if a partial re-design of the problem area is underway and what the expected scope and timescale will be.
On the plus side amortised against future performance at least gives the opportunity for it to be absorbed and offset by improvements in other areas.
My view would be that R-R has the technical capability and resource to resolve the issue but that better communication of the problem and its resolution, whilst potentially slightly embarrassing, would protect the T900 / A380 program and the perception of the Rolls-Royce brand.

Thursday 9 December 2010

I'm dreaming of a Christmas rally

Frustrating day with my biggest hitter, R-R, starting well this morning on the back of apparent market maker optimism but then falling back to level for the day until a 3pm brief which tells of a T900 engine being replaced on an A380 waiting on delivery to Quantas. The engine change came after a one-off inspection designed to seek flaws in an oil pipe in the core of the engine. 
The one-off checks instigated by the Australian safety board are on top of those required every 20 flights.
On the plus side Airbus are maintaining their delivery target for the aircraft.
R-R close @ 642, -10

BG up on good news on costs

I see that the Monetary Policy Committee met again today for monthly tea and biscuits. No change to interest rates despite inflation concerns. Pointless really if they aren't going to manage the economy. The MPC have previously kept interest rates artificially low which fuelled the housing bubble and cheap credit conditions leading up to the credit crunch. The gamble now seems to be to rob savings to recapitalise the banks whilst waiting for inflation to make the debt relatively smaller if not actually.


Made a couple of purchases last week which I need to detail, but still keeping an eye out for more ahead of the New Year.


Still dreaming of a Christmas rally!

Wednesday 8 December 2010

Aftermarket comments

Just got online at 5:30 pm for first view of markets today. Seems directionless after a minor recovery over the last few days, market commentary is stretching for an explanation and cites a strengthening dollar making commodities more expensive and therefore suppressing miners profits. Seems a real stretch in terms of the FTSE as dollar to sterling was around $1.57ish to £1 at yesterdays market close but weakened to $1.58ish in the evening. Just looked now and the dollar has strengthened to $1.5773 to £1 which, at worst is back to where it was when the FTSE closed yesterday or at best the dollar is still weaker than it was yesterday?
But as 4 of the miners are in the top 15 biggest companies on the FTSE it has an effect when they all finish down. Personally, the whole FTSE dropped off a cliff (only 30 points but looks big on a chart) at around the time a directionless Dow Jones opened so not sure I agree with the commentary.





Tuesday 7 December 2010

What is my Investment Strategy 1.

OK, so whats my investment strategy. Well like most private investors I have a portfolio with remnants of previous strategies (indiscipline), and my strategies and behaviours are a culmination of previous experiences, good and bad, my psychological profile, and further education.
I do find that certain shares and strategies work better in certain times and there are always more fashionable "herds" roaming the market.
At times, the stock market can also seem like a litmus test for the mood of the nation or global economy and this absolutely does affect share prices.
Currently, the mood seems strained and wary across the globe with most people recognising a need to cut spending but not wanting it to affect them and not wanting to be told by the incumbent powers that be. An understandable reaction  when the architects of the credit crunch appear to be getting off scot free 
Personally, having also been caught out by the high risk rollers of the investment banking industry, the dodgy used car sales approach of the retail banking industry, and the short sighted policies of regulatory bodies and government, I am now seeking to rebuild my investments to secure mine and my family's future.

I have always tried to maintain a balance between safer interest paying savings and my investment portfolio which worked well when Isa's and bank accounts actually paid interest but seems less wise now that government and banking are robbing our interest to re-capitalise themselves.
But, inevitably things will find a new norm once the artificial tampering is removed so I am not about to make rash decisions that will need to be reversed later.

This is a slightly modified version of the view put forward by Benjamin Graham who proposed a 50/50 balance between equities and fixed interest securities (namely gilts, bonds etc). With an annual re-balancing exercise. This worked on the theory that the investments complemented each other so that when shares were going down the bonds were going up and vice versa.
For me it provides some diversification ensuring that I am not fully invested at any point in the boom and bust cycle (no Gordon you didn't solve it!), and gives me access to cash in times of personal need which gives me one less pressure to sell shares to raise funds. It is absolutely certain that shares will go up and down but if you invest every last penny of your savings in that first investment and your washing machine breaks down you can bet that your investment will be showing a loss if you "have" to sell.

So that's the first guideline I follow: maintain a balance between interest paying savings and my investment portfolio.

Into the unknown - my very first blog!

Well here goes, my very first blog. Sounds a little like I am talking to myself but... what the heck. I think of myself as an average type of person but have always had a fascination in the stock market and, as a result, have always independently managed my own personal finances and investments. Over the years I have also been a regular sounding board for friends and colleagues so thought that I could "blog" some of my thoughts in a way that might help one or two people along the way as well as give me a sounding board.

I first dipped my toe into the stock market a couple of weeks before 1987's Black Monday purchasing a small number of units in what was then termed the "biggest" unit trust launch ever with, I think, Royal Insurance. Wow, I was just completing an engineering apprenticeship at the time with a first home/mortgage and a new born baby.....welcome to the real world! 
In the following years I have also been invested through:
  • 1997 Black Wednesday - EMU crisis
  • 1998 Russian default / LTCM collapse
  • 2000 Dot com bubble bursting
  • 2001 September 11th attacks
  • 2005 July 7th attacks
  • 2007  Banking/credit crisis
These are just the big events, the market crashers that make you question your very sanity, not the temporary losses of confidence and heightened emotions that occur with more frequency. 

Makes you wonder why I am still interested!
Perhaps I should be having my head examined but what the timeline does show you is that there will be lots of testing events along the way and don't let anyone tell you that "things are different now", "there is a new paradigm" and "no more boom and bust" as these people have their own objectives but typically will have a very short shelf life.

More than ever, I believe that managing risk and cash flow in my personal finances and investments are essential for me in a time when no-one else is going to look after my interests with the same care and attention as myself.
I would have to say that my main mission is for some kind of financial security and self sufficiency for myself and my family.

So wish me luck and I will wish the same for you.