July 2013 Investment Review

The graph below shows the progress the FTSE 100 Index has made over the last 6 months. It has only been 3 months since our last review but I felt it would be useful to show the progress made in the markets since January. Let’s not forget the FTSE100 did not get above 6000 points until 2nd January.

How am I doing?

Most clients should see their portfolio totals remain broadly level over this this last 3 month period.

What have you been doing? There have been lots of contract notes flying around

We ran to cash in the first half of March when the markets had climbed 12%, believing it all looked a little too good to be true. The second half of March and much of April rewarded our decision, but we felt decidedly un-comfortable during the first half of May as markets rose very strongly. However June was a shocking month if you were fully invested with markets tumbling. Our patience and commitment were rewarded allowing us to deploy our client cash holdings back into the market, buying at prices we had not seen since early January. This selling around 50% of client equities in March and re-buying similar equity funds cheaper in June, will undoubtedly deliver value to our clients later in the year.

Not sell in May and go away this year?

The last three years did very little for client fortunes over the summer months, but this year feels different. We are more likely to sell Corporate Bonds rather than equities over the summer months. We will continue to monitor our shares and if markets get a little toppy again we could take some profit. It seems companies are profitable on the whole, economies are recovering (we may have lost our AAA rating but the double-dip didn’t happen after all) and there is political will to tackle the problems in Europe.

Why the big fall in the market from June followed by the swift bounce back?

All down to Ben Bernanke. I blogged my thoughts at the time, you can read them here

So what next?

We don’t have a crystal ball but recent changes in Egypt and China, coupled with the words and actions of central bankers Mario Draghi at the European Central Bank and our new governor Mark Carney have steadied and strengthened European stock markets and weakened our currency.

Do we want a weak currency, it sounds bad?

A weak currency isn’t good if you are travelling outside Europe on your holidays over summer, but once again it helps our foreign share holdings as they become more valuable in Sterling terms.

When is the next update?

These updates are quarterly so we will write again in early October.