Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Trying to take you off the Investment Roller-coaster

Stock-Markets / Financial Markets Dec 13, 2008 - 07:23 PM GMT

By: Armstrong_Davis

Stock-Markets Best Financial Markets Analysis ArticleI have pleasure in sending you our winter 2008 Investment Report. Do have a look at he website www.ArmstrongDavis.com should you wish to view previous reports as well as our work in the national media. The website should be entirely revamped by the New Year - more user-friendly and interactive.


    Stock Market

    At the lowest point, on October 10th, the stock market was down c 45% from the October 2007 highs, taking us back to 2003 levels. You will recall our extremely bearish stance. Looking out over the real economy, I’m afraid to say we’re still huge bears – the global recession is firmly in place and, in Britain, we aren’t even close to the worst of it:

  • Unemployment is rising more strongly than for decades.
  • Sales of goods and services (GDP) are in rapid decline i.e. recession.
  • Home repossessions are rising and will rise strongly in 2009 (N.B. government owned banks are delaying inevitable repossessions).
  • House prices are falling at around 1.5 to 2% PER MONTH (Bank of England figures for mortgage lending are pointing to negative lending next year i.e. debts outstanding to fall which leads to even more rapid falls in house prices). From the average London house of c £325,000 the current rate of falls amounts to c £5,000 PER MONTH!
  • Corporate and personal bankruptcies are rising sharply (we saw accountancy and legal firms hiking up their recruitment of insolvency specialists over the last year).
  • Sterling has plummeted leading to higher import costs of food and fuel. In our view, oil has bottomed on world markets at c $45-50 and will rise from about here.
  • The government announced a strange VAT cut which we do not feel will attract people to borrow more (even if banks were lending) and spend. They also told us they would be taking borrowings up to 1970s levels (and that’s only if their projections for the economy prove accurate however we feel they are highly optimistic) and our taxes will go through the roof for many years, conveniently starting from just after the next election.

What can we see longer term?

Governments all over the world are printing money like there is no tomorrow. Naturally, one can sympathise that they are trying to buy their way out of the crisis. It may look good in the polls, shorter term, further out however when we have more money in the system, without greater production of goods and services, then we will have inflation – the cost of the same item will be higher. Thus, we feel that going into 2010/11 we should expect to see the fall in inflation (dis-inflation) reverse and inflation rear its ugly head again.

As well as more money swilling around the system in order to get us out of this slump governments, including (especially) ours, will keep interest rates lower than they should do and for longer.

Of course, this is one of the reasons we are in this mess in the first place – Alan Greenspan, the previous Chairman of the US Federal Reserve, slashed rates following the Dot Com crash (2000 to 2002) and reduced again after 9/11. We all followed on this side of the pond, and elsewhere. Thus we had a house price bubble which was further exacerbated by easier and easier lending from 2005.

Enough of the history lesson because that’s…er… history. As investment advisers and financial planners, our focus is the future. So, if inflation is coming around the corner (say a year or two), what will happen to savings? In the short term with the dis-inflation that we currently have, deposit rates have fallen along with the slashing of the Bank of England rate. [First attack on savings!] Then as inflation rises savings again will be attacked [Second attack on savings!] as the purchasing power of capital and income will be severely battered. It’s been a long time since we had double digit inflation in this country (around 1990) and most folk have forgotten what it’s like. Well, they’ll soon be reminded…(Again, inflation will rise not immediately but from 2010 or 2011).

So, once more, dear reader, we strongly suggest those who have low or no exposure to commodities, in your portfolios, in your ISAs, in your pensions, in any long term funds you hold, that you review your affairs and you increase your exposure. In particular, to precious metals such as gold and silver. Our preferred route is via unit trusts of companies in these fields such as miners and oil companies. Remember how oil and gold did in the 1970s when inflation was up in the 20s%.

I’m not saying this next statement will always be the case – it won’t! – however, it is a fact that since November 26 2008, to the date of writing, December 8 2008, the US index of gold stocks have risen c 52%. Methinks the markets see inflation out there, “comin’ round the mountain…” As we have often said, markets predict the real economy. Hence, the stock market started plummeting last October before the recession took hold. Many of our clients have held gold stocks via unit trusts and recently some increased their exposure, at in our view the best value for perhaps 50 years. In case you believe that the rise has happened and there’s nothing left for you, well we see commodities on a rising trend - with high volatility - over the next DECADE or so. There’s plenty of opportunity for private investors to invest for the long term.

Here’s a thought – over the last year the stock market (FTSE 100) has fallen around 33% (year to December 8 2008) whereas gold has RISEN over 35% in Sterling terms in the same period. Perhaps the gold market is trying to tell us something…such as ‘Buy me!’

As the economy turns down sharply, as we forecasted it would, can your friends and family be sure they have planned appropriately? If you are a professional adviser, such as a private client lawyer or an accountant, can you be sure that your clients are well looked after by their financial and investment advisers?

Ask us about how we could help them.

Compare Armstrong Davis Ltd to any other independent financial adviser or stockbroker.

Jonathan Davis BA MBA FCII AIFP FPFS ,
Chartered Financial Planner

Managing Director

jdavis@ArmstrongDavis.com

www.ArmstrongDavis.com

Please remember investments can fall as well as rise. And they will! - Armstrong Davis Ltd accepts no responsibility for any loss or damage resulting directly or indirectly from the use of this content.

© 2008 Copyright Jonathan Davis - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules