Are Your Investments Prepared For Stagflation Britain?
May 30th, 2008 | By Ben Traynor | Category: Politics & EconomicsShould you still ‘Sell in May and go away’?
As we march steadily in the direction of June, Theo Casey’s been pondering an old investment adage:
Sell in May
And go away
Don’t come back
‘Til St Ledger’s Day
I’m always suspicious of financial advice that rhymes. It feels about as sensible as buying your shares through a dancing broker. But is there anything in the ‘Sell in May’ philosophy.
“Maybe,” says Theo. “Once-upon-a-time. But, to be honest, there are a lot of reasons right now to expect stocks to go down, not just the month on the calendar.”
Today, Theo takes a close look to see if there’s any logic behind the saying
“The worst week for stock markets since February”
A bear market is forming. That’s the view of John Authers, writing in today’s FT. He says we’ve just had “the worst week for stock markets since February”.
Authers cites the ailing US housing market as one of the culprits. But no prizes for guessing who the big baddy is…
Yep! It’s the oil spike!
“Those who like charts,” says Authers, “might try comparing the S&P since it peaked in October with the way it behaved in 1973 and 1974 when, as now, an oil spike combined with fears of stagflation.”
It’s a big, bad, 1970s-shaped crisis. And we’re right in the middle of it!
As Authers continues: “So far, stocks have moved much as they did in 1973. That is concerning, as 1973-74 proved to be a nasty bear market, with a fall of 50%”
Of course, there’s no guarantee that history will repeat itself. Past performance, so the old sea-shanty goes, is not a reliable indicator of future results.
Nevertheless, it doesn’t hurt to prepare. Like us, Authers sees commodities and emerging markets as the big growth areas.
Here at Fleet Street we have those areas well-covered.
On the commodities beat we have Garry White. Garry’s commodities portfolio has delivered a barnstorming performance — as you’ll see for yourself right here.
And on emerging markets we have Manraaj Singh, the power behind Profit Hunter.
If you’re an adventurous type, and you like your investments with a dash of Tabasco, then Manraaj is your man.
His latest recommendation is a stroke of genius. A way to play both China and America off against each other… and profit from their insatiable thirst for oil!
Until tomorrow
Ben Traynor
Source: Are Your Investments Prepared For Stagflation Britain?
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