Published by Kauders Portfolio Management, Authorised and regulated by the Financial Services Authority
WAIT AND SEE is very tempting. Most people only decide a bear market is in progress through falling values. When prices rise they immediately think "bull market", forgetting that bear markets have rallies. Surely it is better to face facts now and get out of equities while they are rallying than wait for the next downward drive in prices?
If you are in need of income, "wait and see" is equally dangerous. Forget the stories about higher inflation if Britain joins the Euro - they will soon be forgotten. Lower interest rates and lower share prices together are now the long trem trend.
Above all, do not be seduced into buying stock market products for a higher income. As recession forces companies to cut dividends, those high income schemes are at risk: lower income and lower capital values are more likely.
You can still get over 5% gross in Gilts, secure in the knowledge that income will not be cut. If you hold to maturity then your capital value is certain no matter what happens to the Gilt market meanwhile.
For those UK based investors able to take some currency risk, US Treasury Bonds provide an attractive alternative. You can get over 5½% gross in the world's leading currency. According to The Economist Big Mac Index (21st April 2001), sterling at $1.43 was still 12% overvalued against the US dollar.
You are welcome to quote or re-use this material, provided you acknowledge the source "www.contraryview.co.uk, published by Kauders Portfolio Management".
Return to home page of contrary view or return to complete index
For information about our advice and services visit our main site or click for contact details
WARNING: The firm can only be responsible for action taken on our advice given personally and specifically to be suitable for each individual. Statements on this site do not, on their own, constitute advice. Please note that UK regulatory requirements prevent us commenting on your existing investments or giving specific advice, unless you first sign one of our portfolio service agreements.
This advertisement has been approved by Kauders Portfolio Management, who are authorised and regulated by the Financial Services Authority in the conduct of investment business in the UK. Opinions and statistics are valid at time of publication but may differ later. We leave them on the site so that you can see how useful our point of view has been.
© Kauders Portfolio Management 2001