We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.Some well-known investing chap you may have heard of
“There is no shortage of bad news now, but, if you invest when everything is smelling of roses, the chances are you are paying a premium for the comfort of doing so,”
The heft at the end of this chart is not so much that the stock market has decided to go gangbusters. No. That, dear fellow UK reader, is the great sucking sound of the pound falling relative to everything else. It makes sense to shovel as much money out of the country or into hard assets as possible, and preferably by last month. It was some of the rationale behind the gold buying last year, but now that Mr Market has taken a bit of a swoon, productive foreign assets are also of interest. The UK stock market is looking less bad than it should do at the moment because though denominated in pounds it also contains a fair amount of foreign assets, though all that mining and oil is probably still tracking down in price measured against foreign dev world currencies.
Braver souls than I trade forex. The trouble with that is it’s still holding cash, it’s sort of like holding gold, and the trouble with owning an asset like that that is not only do you have transaction and holding costs, but when the hell do you decide to sell and buy rotten-looking assets? It’s the old retail investor dilemma again, you have to make yourself do it.
So I take heart with that sucking sound of retail investors beating it. It means it’s time to keep on buying and ramp up 🙂
Now I happen to be in trouble now on that front, because there’s another investment opportunity for me, which is a cash investment, into the SIPP holding my AVCs. I will toss my entire earnings for this year into that, to maximise my tax-free PCLS (if we still have one after the Budget). Ideally after March 16th’s budget, because I am hoping for a flat-rate 25% tax bung replacing the existing 20%. I will therefore flatten myself into this, because I have coasted for three and a half years on savings and these are almost all out. I don’t want to spring cash from my ISA because now is the time to invest, and I don’t want to liquidate my NS&I ILSCs because you can’t reload them and no other cash-like savings beats inflation these days without fiddling about with a zillion accounts, which I can’t be bothered to do.
So I will borrow money on credit cards at 2% p.a. to invest in bigging up my PCLS. Because I can eat paying 2% if there’s a 20% tax-free bung in it. Although I am looking forward to getting a hold of my pension savings in the new tax year, because I don’t like carrying debt. So I will be adding to the statistics of Britain as a nation of spendthrifts going bananas on their credit cards.
However, unlike my fellow-countrymen who are spending this on consumer goods and holidays in the sun, I will be buying cold, hard, cash with this – not at the usual rate of -2% but at +18%. I think Mr Micawber would let me off. As for the others rushing for the exits – if you can’t buy in, at least sit on your hands FFS, guys!