“Jonathan Davis Wealth Management have saved my wife and me from losing 40% of our net wealth over the last 12 months”

Robert Gaunt - Outsourcing/Offshoring Consultant and Renate Hechter (Sydney Australia) (2009)

Western stock markets

Posted by jdavis on October 27, 2014

It doesn't take a genius to see that the FTSE (the index of the share prices of the largest 100 public companies based in the UK) is down on where it was nearly A YEAR AND A HALF AGO.

It is not relevant that the fall may be only c 7%.  It is not a rise.  And it is nearly a year and half ago.  This is not a market powering ahead or making positive returns to portfolios.  And statistics show

  1. This is the sector that most private client portfolios are most heavily invested in and
  2. The sector that most people are putting new money into, month after month, is UK Large Cap High Dividend shares' funds

Yet, they cannot have made any profit from it since the Spring/Summer of 2013.

We are often showing to clients how the herd often makes the wrong investment decisions because it feels right at the time.  It would appear this is the case yet again.  How do portfolio managers sleep putting more and more into a sector that may actually be in a major topping process, after having risen from Spring 2009.  Very soundly we imagine.  How will their clients sleep if it IS a topping process and the result is a large fall and thus a large hole in their retirement fund?  Not soundly we imagine.

Now it may be that the UK is unique?  Let's look at the top German index, the DAX:

It's back to levels of a year ago, after a sharp drop since the Summer.

So, it's not just the UK.

Now, we will show you a most interesting chart of 'the insides' of the US S&P 500 index.

Margin debt, in essence, is the amount of borrowings market participants take out to invest in the stock market.

The amount outstanding is a) huge and b) more than 2000 (Dot Com) and even 2007 (the Credit Bubble).

Given all the above, is now really the time to hold large amounts in and invest in Western stock markets?  You decide.

 

 

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