Uttoxeter Online Magazine

The old Chinese curse ran “may you live in interesting times…” – we are certainly living in interesting times now. 

With banks being Nationalised (Northern Rock and the Bradford & Bingley Loan Book) major financial institutions having to ask the UK Government for support (Royal Bank of Scotland, Lloyds TSB, HBOS etc) and whole countries on the verge of bankruptcy it is no wonder that the UK and World Stock Markets have been volatile of late. 

The worldwide web has bought a situation where we no longer have discrete national, or continental, stock markets.  We, effectively, now have one worldwide stock market which is open in different parts of the World at different times according to their working day.  Thus a problem in one part of the World soon spreads. 

It is important to realise that the UK stock market has seen these gyrations before, the 1970’s, the 1980’s, the 1990’s and even more recently the noughties…..and I am sure we will see them again in the future.  Inevitably these falls can be a cause of concern to investors but it is important to remember the cyclical nature of the UK economy and its stock market and to bear in mind that funds held in this market are medium to long term investments.  Short term fluctuations are less relevant than long term values. 

While it is natural that an investor should be concerned I would counsel you not to “worry” over the matter.  As long as you have the right money in the right place and you have sufficient cash shielded for short term gyrations this should be of little consequence in the long term.

While no one knows, for sure, when the market will recover the recent announcement by the Worlds Government has given sufficient reassurance that the FTSE 100 has risen from a low of 3932.06 on Friday (10 October 2008) to 4221.14 today (20 October 2008). 

Finally, I would remind you of the old saying “every cloud……”.  On 15 October 2007 a distribution unit in the St. James’s Place UK High Income Trust (Invesco Perpetual) would have cost 358.1 pence and distributed an income of 4.3 pence per annum.  The same unit today costs 248.1 pence and is projected to distribute the same income over 2008/2009.  Similarly, a unit in the St. James’s Place Property Distribution fund has fallen from 116 pence to 82 pence with no change currently being anticipated in the Income Distribution.  If you are looking to buy an increasing medium to long term income now is a good time to make that purchase.  If you would like to discuss this, do contact one of the RBA advisers.

I hope that the above has been of some reassurance, but please do remember that if you want to speak to an adviser we are at the end of the phone ( 01889 568444 ). 

Robert Brown
Founding Principal, RBA Wealth Management