Another Monday and another 100+ points drop of the FTSE100. But if you look closer the biggest fallers are the banks. Barclays, Lloyds & RBS all down around 5% in early trading and this is because legislation is finally being brought forward to try to curb the excesses that have occurred in the past. Excesses that obviously continue today otherwise the Vickers Report would not have been greeted with such a drop in the value of banking shares. Barclays have already mooted that they would be off, basing their business in the US if it became too hot in the UK regulation kitchen.
Of course if the global super-computers sense blood the automatic sells trip in and of course that means the shares which need a recovery also suffer; Eurasian, Xstrata, Fresnillo, Kazakhmys, Rio Tinto all down over 45.
Our core UK equity holdings remain with the dividend paying businesses which continue to fair much better, without the huge swings that we see in the FTSE100 as an index. Typically the shares we hold in our Vanguard fund are down around 1.5% which is more like the normal fluctuations we expect.
However for those of us who have bought into the FTSE100 at this level thinking it was cheap, this is the third time it has tested this level of cheapness. the goal however remains – hold until it reaches its Spring levels and then take the profit.