17 August 2007
“If you’re feeling seasick, look at the horizon” says Justin Urquhart Stewart of stockbrokers Seven Investment Management, at the end of a week of unprecedented turmoil in world stock markets.
His advice to ordinary investors is to ‘stay put’ and invest in cash until the current uncertainty comes to an end. “For experienced investors, there will be short term trading opportunities, but for everyone else, the only safe option is cash,” warns Urquhart Stewart.
Ken Murray, who manages the Blue Planet Worldwide Financials Investment Trust, the second best performing financials fund in the world over three years, warns that we are entering one of the greatest banking crises in decades.
“The credit cycle has turned, bad debts are soaring, banks will go bust and stock markets will fall much further,” says Murray.
While banks continue to be unwilling to lend to other banks that they perceive as risky, the liquidity problems in the money markets will persist and probably worsen, he says.
So where does this leave private investors? Murray advises against investing in UK banks, but rates retail banks in countries such as Russia, Poland, Greece, Malta and south east Europe, where there are low levels of personal debt and little exposure to the problems afflicting US investment banks.
Murray also warns private investors to keep an eye on corporate bond funds they hold for any exposure to companies and banks which are trouble.
Above all, Urquhart Stewart advises private investors against trying to call the bottom of the market. “No one knows where this is all going to end. At the moment, it’s like tap dancing on a peat bog.”
Perhaps that’s a buy signal for investing in debt management companies and insolvency practitioners.
For more on savings accounts visit:
http://www.find.co.uk/banking/savings_accounts_centre/savings_accounts