I’ve no ‘king idea what we are doing up here mate…

A great quote from Jimmy at FinanceRomance from a market maker looking back at the ramp up over the last year and getting the jitters about the lack of substance behind the market rally, from the May 10 line or earlier. His jitteriness was prescient, well on the one-month timescale, anyway.

He was right to be worried ;)
He was right to be worried 😉

Round about the same time, back in May, an Ermine was surveying his eyrie, thinking to himself “really need to do something with this year’s ISA allowance”. Although it will push me over the FSCS guarantee I’ve decided that the Retail Distribution Review has made everything so unclear I will eat the risk and stick with TD for another year.

There was still the problem, however. I was unable to see any good reason why we are up here, either. Let’s face it, the Euro fiasco is still lurking under the water and has got to blow some time, the fundamentals if anything are getting worse as the rot metastasizes and begins to eat at the core. If someone were to take bets that in five years Greece would return to the military dictatorship where it was in my schooldays I’d consider putting some money on it, and switching off the TV station has a kind of cold-war symbolism, like the last broadcast at the start of this clip from Hungary that chilled my grandparents in 1956 as they listened from neighbouring Germany:

There are six levels of crap going down in Syria that is killing shedloads of people,  threaten a new cold war, threaten the oil supply and for some reason we appear to be choosing some unusual bedfellows over there. Please, no more foreign wars until somebody works out how to win the peace…

It’s a puzzle to me exactly why there’s been such a party in the markets. The trouble with the ISA allowance is it’s a use it or lose it. But I couldn’t really find much worth buying. Though it was a dearly hard-won piece of learning, I have learned don’t chase momentum…

Then I lit on the section on TD which had Bed and ISA forms, and figured I still have some unfinished business with Sharesave. I sold 10k of Sharesave shares last year, both to thin out CGT liabilities and to diversify the holding into something else. Though holding a shedload of shares in one’s ex-employer is a lot better than holding a shedload of shares in one’s current employer it’s still bad news from a sector diversification POV to hold 40% of my portfolio all on one firm. So goodbye some of The Firm and hello Vanguard Dev World ex-UK – for the simple reason than my HYP is UK and I need to get out more…

The nice thing about bed-and ISA-ing is that with TD I save one lot of dealing fees, though I still eat a hit of ~ £100 on the turn. It looks like the anonymous trader has got his view heard, and the market is turning south, so I may have jumped the gun. However, at least I don’t have to worry about the CGT, and since this year’s ISA didn’t actually cost me anything I guess I can use the regular account to buy if the correction turns into a rout. Would it be too greedy to want the FTSE down by the 5500 mark sometime this year? It was lower in the 2011 Summer of Rage but I hope that sort of thing won’t happen again. Well, a noticeable summer wouldn’t be bad, but not the rioting for desirable consumer goods.

30 thoughts on “I’ve no ‘king idea what we are doing up here mate…”

  1. *cough cough*



    I think you’ve picked a good option, getting some ex-UK exposure.

    I disagree that Europe isn’t getting better. There’s such a thing as the bottom of a trough. When you’re in it, you’re still in a hole and you still face a steep climb out the other side. But once you’re climbing, you’re getting better.

    Greece is perhaps the outlier here. That situation does seem to go from bad to worse. But in many of the other countries some interesting reforms are taking place, the banks have set aside a lot of money or been recap-ed or done over and merged together, and exports are creeping up.

    Also, it’s got that the crisis has reached the core. Remember Europe was never as sick on a total continental view, the trouble is the good stuff isn’t sitting alongside the bad. Now the core is “in it together” we should see a bit more grumpy solidarity.

    Did you ever look at BOI, by the way? You might like it. Well capped Irish bank now, not immune if all goes pear-shaped it will, but otherwise 10% a year and some hope of capital returns over the years ahead.

    (I have a feeling I’ve mentioned before, though, and good for you if you laughed me off! ; ) )


  2. Ah, but you are pulling it out ahead of doing something useful with it, like a prospective home purchase. Whereas I still have the 11k and ask myself “so what the bloomin heck am I meant to do with this and get a return” instead of watching its value leak away.

    BOI, eh, that does look intriguing 😉 As for Europe I have some stake in via HSBC’s CPEI and when the price on that falls to what I last paid for it I may start accumulating again in the Vanguard equivalent. Even though I feel the Euro will go titsup at some stage it’s good to have a stake in the possibility of the phoenix taking flight…

    See your point on the all in it together angle, perhaps it will concentrate minds. The Economist had an interesting take on Germany perhaps offering hope to Europe’s hard-pressed youth!


  3. Ha, ha, FTSE 100 at 5500 –I’d love it, but will probably settle for 6000. Not planning to use my ISA allowance for a few weeks yet and then will stage it over the rest of the year.


  4. I’ve decided to prevaricate my ISA allowance this year. My portfolio is looking a little green around the gills ytd, a annnnd it’s gone with an ISA’s worth would probally sour my mood for the rest of the year.
    However that said, the new boy at the BoE might be eager to prove his worth and make me regret holding cash.

    If in doubt do the garden ?


  5. ermine many thanks for the mention.

    I hate old wives fallacies such as “sell in may…” but I don’t think its ever been more pertinent than this year.

    I am sat on cash at the moment. Cash is king when you don’t know a thing.

    I will be buying below 6000


  6. Hi Ermine,
    Interesting article, well worth a read.
    Here’s a little conundrum for you.

    In the light of the Co-oP Bank changing PIB’s to shares.

    Where do Pension Funds look now for safe (?) assets to pay out monthly pensions.
    The norm is to buy bonds, be they Corporate, Government or PIB’s, in sufficient numbers to pay the pension liabilities for the coming year.
    Therefore if the Bonds etc can be changed to SHARES with little or no guarantees of their dividend or value.
    Two questions,
    What will happen to the bond market?
    How will the large pension providers manage to find enough cash, and keep it? [ref the Cyprus Bank Grab of Assets above 100k] to pay pensions in the current year?


  7. @Nathan there’s still time yet in this year 😉 And you can knock the value of non-financial assets in the garden.

    @SG, Jimmy – okay, 5500 was greedy 😉

    @Jimmy – you have a lovely narrative on your blog – it’s a great read!

    @Lupulco – There seems general agreement thta the bond market is in for a lot of hurt.

    In the end I think we witnessed the death of the risk-free asset some time ago. It is possible that one day the falcon will no longer hear the falconer and the centre will not hold…


  8. First time I’ve ever seen the second line of ‘The Second Coming’ quoted. The most popular quote seems to be

    “The best lack all conviction, while the worst are full of passionate intensity.”

    I’m still waiting for a massive drop in the price of crude to kick start the global economy. There’d be some interesting geopolitical consequences too…


  9. Yes, it’s the Seventies all over again. The markets are roaring but on cheap money ! Sell in May, go away. Plus que change…I can hear those hog-nail boots/jack boots clapping up the Athens avenues. Life today ain’t nuthin’ but a crap shoot. Listen to your German granma !


  10. If you are going to be a bear be a grizzly.

    even I didn’t expect the market to reach 6000 so quickly. August will be the killer with traders closing their positions in advance of the slow summer simmer. Interesting times…


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s