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Crispin Odey warns FTSE 100 could crash 80%

Ultra-bearish hedge fund manager believes UK is set for a double whammy of a recession and inflation.

 
Crispin Odey warns FTSE 100 could crash 80%

Hedge fund manager Crispin Odey has warned the stockmarket could fall by a whopping 80% in his latest update to investors. 

Odey (pictured), whose ultra-bearish stance has meant his flagship European hedge fund has failed to deliver a positive return since 2014 as markets rallied, told investors 'times are getting interesting'.

He added: 'The FTSE 100 share index is now up 30% over five years, whilst earnings have fallen by 80%. On an earnings yield of 1.6%, the stock market could fall by 80% and, provided profits did not fall, would be on a 13x P/E multiple.'

Odey pointed an accusatory finger at Mark Carney, governor of the Bank of England, saying that while the central bank may be 'proud' to have engineered such a result, there was increasing evidence that this was unsustainable.   

'On the back of the uncertainty for overseas investors in UK plc following on from the Brexit result, the current account deficit is ballooning and the budget deficit is following,' Odey noted. 

'Carney, the governor of the Bank of England, has responded by flooding the money markets with more cash, QE, and in the process supporting the government 10-year bond at a current yield of 1.2%.

'However, as sterling falls against all its trading partners’ currencies, it is mechanically ensuring that inflation rises up through 3.5%.'

Odey believes that the traders buying into sterling weakness on the back of its 20% fall since Brexit, fail to understand the further the pound falls, the greater the difference between next year's inflation rise and today's interest rates will be.  

'Sterling is getting more expensive, the further it falls. Carney is really under pressure and should be raising interest rates, but it now looks as though a rise in interest rates will be over his metaphorical dead body.' 

Ultimately Odey believes we are destined to have the double whammy of a recession and inflation in the UK, making it difficult for the stock market to stay above this level. 

'What QE has done is to make investors complacent but also optimistic that only an upturn in economic activity, spelling higher profits could trigger upward interest rates,' he said. 

'What the UK is promising is rising wages, recession, inflation and falling profits. Not exactly the prize that ticket holders in the FTSE and the gilt market have paid up for.' 

Odey, a leading Brexiter, made £220 million from betting markets would collapse as a consequence of the UK's decision to exit Europe. He famously said the 'morning has gold in its mouth', after the result was declared.  

The win was initially a boost for his Odey European hedge fund, which gained 15% as markets nosedived in the days after the referendum.

However, the recovery in stocks since has failed to marry with his negative view, leaving the strategy down some 43% this year. This includes a massive 22% loss in a two week spell in March after incorrectly predicting a fall in Japanese and Australian government bonds.   

The fund, which has 28% of its assets in cash, gained 1.1% in September versus a 1.4% rise in the benchmark, according to his investor letter.

Sky and Randgold Resources were his best performers in the month up 0.5% and 0.3% respectively, with this offset by falls of 0.3% and 0.1%  in Pendragon and Barclays

Odey Opus , the global equities fund he runs for retail investors, has also had a difficult time. Bestinvest, the fund supermarket, has just downgraded it from a four star to a one-star rating, which means it thinks investors should consider a switch to funds such as Fundsmith Equity or Artemis Global Income , which it prefers.

The company said: 'Crispin Odey is undoubtedly a talented manager, but the performance of this fund has been erratic and returns tend to be lumpy, both on the upside and downside. Despite Odey, you need to have a strong stomach to hold this fund and we have higher conviction in other funds from the same sector.'

51 comments so far. Why not have your say?

Micawber

Nov 03, 2016 at 08:23

His fund is already over half-way to losing 80% of its investors - AUM down by 43%.........

Even in the aftermath of the crash of 2008, the index lost less than 40%. 80% is an hysterical call I think.

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Ali B

Nov 03, 2016 at 12:38

Should this actually read. ' hedge fund manager hopes stock market falls 80%, so he can recoup his loses'.

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Nicholas Kendal

Nov 03, 2016 at 16:00

Like a stopped clock - bound to be momentarly right twice a day.

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Owen

Nov 03, 2016 at 16:37

So Odey called for Brexit, but the outcomes are all Carney's fault ?

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paul birtwistle

Nov 03, 2016 at 16:59

Let's hope he's doubled up on his so far disastrous bet and reaps the further clobbering he deserves for such extreme gambling.

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Phil Simmonds via mobile

Nov 04, 2016 at 00:35

Good guy as he is, you would think that with a performance which essentially is circa -40% over the recent period due to his reading of the current market, economic and wider risk asset data, - and how such data should effect asset prices, - that for the time being at least he would keep his thoughts to himself.

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richard tomkin

Nov 04, 2016 at 09:04

Isn't he an Old Harrovian?

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CT

Nov 04, 2016 at 09:30

We could really do without people like Odey.

What a stupid comment.

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Mr Helpful

Nov 04, 2016 at 10:08

"On an earnings yield of 1.6%, the stock market could fall by 80% and, provided profits did not fall, would be on a 13x P/E multiple."

Don't recognise these figures!

Anyone any ideas how they originate?

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Dennis .

Nov 06, 2016 at 10:04

@Nicholas Kendal

"Like a stopped clock - bound to be momentarly right twice a day."

Actually a clock going backwards is correct four times a day so even more useful.

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Mark Stringer

Nov 06, 2016 at 10:04

If opinions were ability then we would have the most talented fund managers in the world.

Another swill bin rattler.

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Hunts Dave

Nov 06, 2016 at 11:11

I don't understand his argument. He seems to be blaming his predicted collapse of the FTSE 100 on the state of the UK economy but FTSE companies make three quarters of their profits abroad. Is he the model for William the über bear in the Daily Telegraph's Alex cartoon? Why hasn't he got all of his funds invested in gold?

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Chris Squire

Nov 06, 2016 at 11:42

Mr Helpful: have a look at http://moneyforums.citywire.co.uk/yaf_postst3781_Large-fall-in-stock-markets.aspx

: Crispin Odey Sees 80% Crash In UK Stocks With Recession, Inflation "Inevitable"

http://www.zerohedge.com/news/2016-11-02/crispin-odey-sees-80-crash-uk-stocks-recession-inflation-inevitable

It links via Micawber’s post to: http://markets.ft.com/data/indices/tearsheet/charts?s=UKX.P:FSI a 21-year chart of the FTSE P/E index. The range is 8 - 40; current value = 31.

Study this chart and make your own mind up as to what may happen next.

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FrankFrank

Nov 06, 2016 at 11:57

Is it not Crispin Odey who is charging 2 and 20% for idiots to invest in his underperforming hedge fund?

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Gleaner

Nov 06, 2016 at 12:28

So all investors will sell all their shares and bonds

and put it in .....................

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AlJolson

Nov 06, 2016 at 12:32

To put this into perpective, a buy and hold investor starting at the beginning of 2009 is losing 15% of the original capital.

A period of almost 9 years and a loss of 15% makes Odey become a billionaire!

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AlJolson

Nov 06, 2016 at 12:46

To lose this kind of money he needs to sack his risk management department (perhaps he hasn't one).

It is a hedge fund without any real hedges!

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Cesar2

Nov 06, 2016 at 16:37

I have really enjoyed reading the comments on this story so far, you should all be congratulated on your wit.

This guy Odey is obviously demented.

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horshamtim

Nov 07, 2016 at 07:24

While 80% feels overblown, some of the issues raised in the article are a matter of hard fact rather than opinion, so pouring scorn on Mr Odey is akin to whistling to keep your spirits up. Personally I am basing my own arrangements on the basis there will be a 20%-30% correction within the next three years, but I accept it is possible it could be worse.

Away from the increased volatility and market noise, there are several things that need to be at the forefront of every UK investor's mind.

We (and the rest of the developed World) are much more indebted than we were in 2008. UK Government debt will now continue rising past 2020. If we factor in the unfunded liabilities for pensions, PFI and other items off the balance sheet, our debt to GDP ratios are among the highest around. Consumer debt is also rising.

We are now late in the current bull market run, so history and economics both suggest we are much closer to the next recession than the last one.

Monetary conditions remain highly abnormal, and there is no obvious route back which does not involve pain. The longer these conditions continue, the greater the likely pain when interest rates start rising again. The ability of Central Banks to come to the rescue again is much more limited as a consequence of these conditions.

Our current account and trade balances are indeed in a mess. Because of the increased disposal of assets here and overseas, we can now longer rely so much on the previous income from these assets.

Our demographics - like much of the West and Japan - are not helpful, and if we actually do succeed in controlling immigration to the level wanted by some the ratio of workers to pensioners will tilt further and faster in the wrong direction.

None of this is good news. As a comfortably off baby boomer who lives within his means, I should survive, but I fear there are a great many households who will struggle. My children and grandchildren are likely to experience much more difficult times than my generation have had to so far.

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Dennis .

Nov 07, 2016 at 09:52

It's strange but most of the sentiments above have been said continuously since the early 70's when I started investing. Times have always been bad, trade imbalance is awful, interest rates are wrong etc etc. I have lived through the 3 day week, the 70's oil crisis, the 1987 crash, the dotcom boom, the 2008 crash (just to name the big ones).

It's as if we are all hoping for things to return to normal whereas I have learned that there is no NORMAL. You either speculate on gold price or market fluctuations or just buy shares in resilient companies and forget what the herd is doing. It has worked for me.

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richard tomkin

Nov 07, 2016 at 11:31

Quite right,Dennis : long term participation in successful enterprises is the key to investment,not second guessing,market watching and all the other chatter you now get from the likes of Odey.I wouldn't give him my money.

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Chris Squire

Nov 07, 2016 at 17:16

I agree with horshamtim and as a fellow baby boomer share his concern about the outlook for today’s children.

Odey is quite right to point out that the stock market is very expensive just now, nearly at the top of its range. It will revert towards its mean P/E eventually , as it has done repeatedly in the past; if it overshoots, as it has done in the past, then an 80 % fall is possible, though it may only last a few hours before the bottom feeders come in to buy and push it upwards.

Dennis and richardtomkin have got it wrong: anyone with money to invest should hold their fire and wait patiently, maybe for years, having prepared themselves by mobilising their cash, preselecting what they might buy, opening the necessary accounts, etc. This is not ‘following the herd’- quite the opposite as when you start to buy they will be trampling each other in a rush to sell.

Horshamtim reminds us that we are ‘late in the current bull market run’. So you may not have to be patient for long. It’s a sound rule of life that ‘it’s later than you think’.

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Hotrod

Nov 08, 2016 at 08:17

I too have been following markets for forty years, and broadly agree with Dennis's conclusions, however the current investment environment is uniquely abnormal to my experience.

Time was when banks were placing adverts in newspapers and writing to their customers imploring them to place their savings in "new, improved", deposit accounts offering 5-8% interest. How times have changed; you'd be lucky to get 1% today, many accounts are paying next-to-nothing. The strange thing is: that although there are record levels of debt, the banks do not want/need to hold their customer's cash. (They can borrow more affectively from the BoE) Part of the problem maybe that the majority of their customers only have a small amount which means any potential profit is negated by admin' costs.

Also the treasury is in the unusual position of being able to mitigate its borrowing requirement by issuing bonds with much lower coupons than those which are being redeemed. In fact it is able to buy back undated securities such as War Loan and cancel them.

I cannot see the outlook for cash changing anytime soon.

I do not advocate putting all your eggs in one basket, but in my view house builders make a compelling case for some of them. They have positive cashflows, pay a decent dividend, and if the market does crash they still have the land which they can sit on until improving market conditions return.

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Dennis .

Nov 08, 2016 at 09:22

@Chris "Dennis and richardtomkin have got it wrong: anyone with money to invest should hold their fire and wait patiently, maybe for years,"

Just how long do you have to wait and when in the last 15 years would have been the best time (no use of hindsight please)

PS M&S CEO on the radio this morning was less than compelling. After 15 years of steady decline this is looking like more and more of a basket case. Very reminiscent of Woolworths, BHS etc. Perhaps we don't need stores like M&S any more.

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Chris Squire

Nov 08, 2016 at 12:20

I waited 4 years from when I inherited a nest egg as cash until I invested most of it in 40 instalments in 2 trackers during October 2008-March 2009. Since then I haven’t invested further. The 21-year chart of the FTSE P/E index at http://markets.ft.com/data/indices/tearsheet/charts?s=UKX.P:FSI shows that there was a further buying opportunity in September 2001, which I missed.

The PE range is 8 - 40; most of the time it lies between 7 and 23 but the current value = 31, about double the average. I infer from this the market is too dear and now is not the time to buy.

I am not a fund manager so I I don’t have to dance as long as the band is playing if I think that a wallflower is better placed to see and understand what’s what.

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Hotrod

Nov 08, 2016 at 17:35

@ Chris Squire

Your strategy would appear ideal, "in theory" but unless you are very rich and have a special relationship with your bank I doubt that it would be practical for the ordinary Joe.

If for example you set up a share trading account but do not regularly trade you would incur admin' charges from the platform provider.

Also a large amount of cash deposited in a dormant instant access bank account would raise concerns. e.g. Is this money "HOT" and been placed there to cool off ? Has the owner become demented, absconded, is missing, or have they died ??

Any bank manager worth their salt would want to know why the money is not deployed more effectively.

In addition: A hard pressed, desperate, bank employee might be tempted to think; this owner doesn't need, or know what to do with this money. I will devise a way to get my hands on it.

I'm sorry but I will not be taking your advice, thank you.

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Chris Squire

Nov 08, 2016 at 18:11

@Hotrod: I described what I did; I didn’t recommend it to anyone - they should do what is appropriate to them.

I have never used a share trading account; I did have a dormant one from Motley Fool until they started to charge for it. All my money went into 2 tracker accounts as I clearly stated. I chose one of them (L&G) because I could deal with them online, using my debit card to buy units in £10,000 tranches.

The bank were not concerned, perhaps because they knew the source of the money (selling up a jointly owned inheritance). It is a remarkable fact that I have had a current account with same branch of a High St bank since 1963 and they have only once tried to sell me something - a half-hearted attempt to to sell me a premium account I obviously didn’t need.

There are no bank mangers any more. However I was phoned one day out of the blue by a helpful bank official who warned me not to keep a large balance in my current account and opened a savings account for it instead which would be less public. She also offered to increase the £10,000 limit on the debit card, which I declined. One advantage of the lower limit is that it forces one to buy in slices over a period of time rathe rthan plumping for a single bite.

Fraud is something I take very seriously. I think the real risk is not theft by a bank official as you describe, which the bank is liable for, but deception by an external fraudster. The Money pages in the Guardian are full of stories about this and good advice on how to counter it.

I do access my accounts online (using a PINterest device to generate a password) but I would never think of doing so via my phone, even if I knew how.

Finally I repeat, for the avoidance of doubt, that anything I post here is not to be construed as ’advice’ - it is only ‘opinion’ based on my experience and it is entirely a matter for you to decide how much it is worth to you.

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Dennis .

Nov 08, 2016 at 18:16

You read the Money pages in the Guardian?

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richard tomkin

Nov 08, 2016 at 18:20

Cannot see what all the fuss is about.Warren Buffett says successful investment is about longterm participation in a profitable enterprise.He does not appear to have "played the market",as so many scribblers advocate,but simply to have invested as if he owned the enterprise in question and was happy to hold in good times and bad,low p/e's,high p/e's etc.Unequivocally,time in the market is more successful than attempting the impossible.All else is noise - including this comment !

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Chris Squire

Nov 08, 2016 at 19:09

@Dennis: yes - I've been reading the Guardian for as long as I've had a bank account - it seems to have done me no harm. I don't follow its financial advice, which is evidently written by and intended for young persons, but I have found the stories about fraud interesting and useful as I have no personal experience of it.

Likewise I find the articles here useful as they tell me things I don't know and warn me of traps I might fall into. I am very much aware of my limitations and that a fool and his money are soon parted.

What do you read that you find useful?

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Dennis .

Nov 08, 2016 at 19:54

About 10 years ago I decided that there is only one newspaper these days that is worth reading ie the Financial Times. It's expensive but I have a premium subscription and get it delivered every morning as well as reading the online version. As I am retired I have the time to read it . It covers the important world events with in depth analysis. Now, whenever my wife and I read any other paper we find it lacking in news analysis, has politically biased and simplistic views and is full of adverts and stuff about football or "celebrities" . I challenge you to read the FT for a couple of weeks and then go back to the Guardian.

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richard tomkin

Nov 08, 2016 at 20:08

If it is so wonderful,why did Pearson sell it?

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Dennis .

Nov 09, 2016 at 09:10

Pearson are having big problems with their educational publishing where the business model of selling textbooks is under threat from the internet. They needed the cash so sold the FT to Nikkei. The FT is a different beast to most papers as it is fundamentally selling business information. It's competition is really from the likes of the Wall St Journal, or Bloomberg.

My original point was that if you want business information you won't find much of use in other UK papers (except daily news about house prices in the Daily Mail)

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Mr Helpful

Nov 09, 2016 at 09:20

@ Chris Squire

"The PE range is 8 - 40; most of the time it lies between 7 and 23 but the current value = 31, about double the average. I infer from this the market is too dear and now is not the time to buy. " Chris S

Difficult this value investing!

Over decades we can get long term drift of valuation medians.

By Dividend Yield over recent decades reckon FTSE All Share seems about 10% above median, the S&P not too disimilar. But dig deeper into earnings and the picture becomes far more cloudy.

Stocks are expensive, but by how much?

@Richard Tomkin

"Warren Buffett says successful investment is about long term participation ............ simply to have invested as if he owned the enterprise in question and was happy to hold in good times and bad,low p/e's,high p/e's etc." Richard T

This is fine as far as it goes.

But remember Warren B, I.E. Berkshire H, holds eye watering amounts of cash at many times through inter alia the Insurance operation, and is then well funded to be able to pick up such long term holdings at reasonable prices as oportunities present themselves.

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Chris Squire

Nov 09, 2016 at 10:43

I agree with Dennis where to get useful business information By opting to put my money into 2 trackers (one of the index and the other of dividends) I have freed myself from the need to read the detail - in effect I am paying someone else to do that for me.

I note what @Mr Helpful says about dividend yields but have no insight into this. I do have the FTSE P/E chart to look so that’s what I do.

I suggest that today’s news is likely to prick the bubble of confidence that has sustained markets and bring about at least a 20-30% correction over coming months. This will be a buying opportunity for those with funds to invest, only 8 years after the last one. If some other adverse events occur (there are many possibles) this correction may turn into a panic fall as predicted by Odey.

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Chris Squire

Nov 12, 2016 at 19:28

There is a set of charts showing how over-valued the market is by historical benchmarks at: http://seekingalpha.com/article/4010747-nutmeg-consolation-accepting-low-expected-returns?page=2 :

Chart 1: Extreme Valuation Exhibited by "Tobin's Q Ratio"

Chart 2: Extreme Departure from Long-Term Trend Line

Chart 3: Corporate Value/GDP Ratio

Chart 4: Ratio of "EV" to Non-Financial "GVA" - enterprise value vs. corporate gross value added

Have a look and form your own opinion of where these charts are going next.

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richard tomkin

Nov 13, 2016 at 10:19

What the hell does all this mean ?!

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Dennis .

Nov 13, 2016 at 10:29

It's an attempt to apply the pseudo science called Economics to predictions about the future although we all know that Economics is actually a branch of chaos theory.

When you start relying on products metrics that you don't understand you are on the slippery slope eg sub prime mortgage derivatives in 2008. or the dot com bubble of 1999. I have seen enough of this witchcraft to steer clear of it and stick to basics.

Don't forget that fundamentally we are just playing a big poker game with other investors where we are trying to gain a bigger share of the means of production and hence wealth.

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Chris Squire

Nov 13, 2016 at 10:42

@Dennis: The game is not poker (bluffing) - it’s dealing = buying cheap and selling dear in an open market place. Tobin’s Q etc are tools to help you decide when an asset class is cheap or dear. Use them or not as you wish. If you know of other better tools - chicken entrails were the thing at one time - then please share them with us.

@richard tomkin: it’s easy to find out what these tools are from the internet; if you don’t wish to do that then it’s best to ignore them altogether and stick with what you do understand.

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richard tomkin

Nov 13, 2016 at 13:21

@squire : I shall ignore these tools.They seem to me the economic equivalent of psychobabble,and about as useful.I am a simple investor.

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Dennis .

Nov 13, 2016 at 13:45

The economic indicators in my lifetime have always been bad, poor growth, poor balance of trade, high inflation, 1987 crash, dot com crash, 3 day week etc. I have lived through a lot of it and cannot recall a time when things were "ideal" I have always been almost fully invested and just keep trickling money in when I think things are even worse than normal. I am now sitting on a portfolio worth nearly £500k (and I don't count my DB pension or house in that).

I will probably put another £1k into Fundsmith later today as the price has dipped a little. Oh and I have never bought gold.

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Hotrod

Nov 13, 2016 at 15:45

@Chris Squire

It would appear that your modus operandi is diametrically apposed to the way I invest. Putting a large sum of money in an instant access account and then whistling in the wind for up to 4 years, forlornly hoping that the market will crash, would appear to me to be a lethargic exercise.

Yes, you may well have profited the last time it happened, but no one can predict when next it will occur because their are too many variables outside our control.

My approach on the other hand is quite different. My experience has taught me to be generally optimistic, and invest in individual companies which are likely to survive no matter how bad the economic weather gets.

I start by taking note of a trend, which then leads to a particular sector. I then use "stock screener" tools to identify companies with the characteristics which I deem to be the most important. I can then riddle my selections down still further by studying fundamental details from company reports.

The one thing I cannot be sure of is market volatility. Stocks rise and fall much more sharply than they used to, simply because markets are manipulated by large players. You cannot compete with high frequency traders, i.e. algorithm programmed computers which execute buy/sell orders in nanoseconds! I have read that this type of trading now accounts for 60% of all transactions.

So my strategy is to divide my investments between fixed interest and a range of the best performing companies, which I hold until I consider that the environment has changed.

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Dennis .

Nov 13, 2016 at 15:54

Interesting comment in the FT last week that at least one of the high frequency traders is giving up on it as the margins are now so tight and once everyone else piles in with an HFT strategy you are into more and more cost in this arms race to find smaller and smaller price differences.

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Chris Squire

Nov 14, 2016 at 11:27

Hotrod: I agree that our approaches are at opposite poles.

Most investors adopt a mix of the two, with widely different results so that one cannot generalise. I did toy with the idea of trying my hand myself, opening a trading account and signing up for alerts from Desperately Seeking Alpha, but in the event I thought better of it.

What you call ‘whistling in the wind for . . 4 years, forlornly hoping that the market will crash . . ’ I call sound judgement of fundamentalsI and a willingness to accept deferred gratification, an essential feature of the bourgeois mindset that underpins capitalism.

……….

Here’s some details of Odey’s positions, long and short:

‘ . . according to his third-quarter presentation to clients of Odey Asset Management, Odey is still set on the belief that a global financial apocalypse is just around the corner. Here are the key takeaways from the 33-page presentation with some notes on the commentary, according to a recording and presentation of the call reviewed by ValueWalk . .

Corporate profits have been falling in both the UK and US markets. However, valuations have continued to rise. The UK market hasn’t taken any notice of average earnings per share falling 80% since the end of 2012. Since 2012 the UK market’s P/E ratio has risen from 10 to 60 . . ’

http://www.valuewalk.com/2016/11/crispin-odey-presentation-crash/

http://www.valuewalk.com/2016/11/crispin-odey-shortseller/

Demented or merely contrarian?

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Hotrod

Nov 14, 2016 at 13:21

@Chris Squire

Crispin Odey presents an macro-economic view by lumping together all companies good or bad and then drawing conclusions from the median result.

In the course of my research I make comparisons based on P/E ratios expressed by company, by sector, and by the index they are listed under.

The facts are that some companies have very high ratios and some very low because of their individual financial structure. The sector, and index averages are of minor importance to me.

Personally speaking: I wouldn't touch the companies Crispin Odey deals in with a barge pole.

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richard tomkin

Nov 14, 2016 at 13:49

Odey is just another speculator : what a shame someone of his ability does not put it to more constructive use.

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Dennis .

Nov 14, 2016 at 15:28

Remember the old adage "invest for the long term but remember also that in the long term we are all dead"

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Chris Squire

Nov 16, 2016 at 18:50

The FTSE closed today, 16/11/16, at 6,749.72, 3.5% off its 52-week high. The weeks and years ahead will explain to us whether Odey is very wise or, as asserted here, ‘demented’.

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Hotrod

Nov 16, 2016 at 23:21

@ Chris Squire

Why are you so hung up on Indexes. An index is only a convenient method of tabulating a group of companies. In the case of the FTSE 100, its the first hundred companies with the highest capitalisations, which is not an accurate reflection of the financial health of its components.

The FTSE 100 index, (at the moment) is "weighted" in favour of energy and mining companies which have become less profitable in recent years.

Next week the recently appointed Chancellor will make his autumn statement, it's inevitable that he will announce changes to the budget. Some companies stand to benefit, some will lose out. Just how much the index moves will depend on the extent that he tightens, or loosens monetary policy and public spending. I know which way I'm betting.

Why do you worship fund managers. They are not benevolent supra-natural gurus who business is philanthropy. If they really were that good they wouldn't be spending their time looking after other people's money; they'd just concentrate on making a personal fortune.

When I was young there was one man who claimed he could help you win a fortune on the football pools. His name was Horace Bachelor. All you had to do was send for a copy of his "Infra-draw Method" and he would charge you nothing! All he asked was that he would collect 10% of the prize money.

In reality it was just a mega-syndicate with hundreds of members, enabling him to enter comprehensive permutations, some of which won every week. The problem was that when the prize money was divi'd up it seldom covered the punter's stakes. Meanwhile his 10% cut provided him with a regular income, and he soon became very rich. As long as he kept advertising the suckers kept coming. Nobody used the words "Scam" or Rip-off" in those days.

So my Moto is D.Y.O.R.

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Hotrod

Jan 14, 2017 at 12:27

Hello again, "What a difference a day makes" (or in this case 2 months) Time, perhaps to reflect upon the events that have changed the investment landscape.

Perhaps the most significant: The election of Donald Trump. No one in the "establishment" thought that someone as audacious and controversial as him could possibly win, but next week will mark the beginning of radical change.

The "market" thinks it will be a change for the better. Often, what he says is painful to listen to, but, you have to give it to him; he knows how to win. Superior wisdom? or just a killer instinct? Well this time it will be different. If he loses, he will bring the whole house down.

Meanwhile on this side of the pond, the previous two months have seen the FTSE 100 rise from 6749.72 to 7337.81 That's an increase of 8.7%. So much for Mr. Odey's prophecy of impending doom, although I am well aware that "at this rate of increase" some unexpected event could trigger a major sell off. For the time being, I'm going with the flow, and I don't see any reason why soundly financed companies in expanding industries cannot continue to produce good returns.

For me, 2017 has started well, and I'm enjoying the ride.

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Nicholas Kendal

Jan 14, 2017 at 12:44

Hotrod - I'm sure you realise that apart from US expectations of expansion affecting values, the FTSE rise is entirely and only driven by the fall in £ Sterling since last summer. It would have changed about 0.2% on an unchanged currency exchange basis. While the world is in better economic order at present Political Risk is the unknown and most likely driver of value change in 2017.

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