After seeing Hamilton win the Silverstone Grand Prix at the weekend I was in a pretty good mood today and then I made the mistake of reading the news and I must admit my cautious optimism is floundering.These were some of the opening lines I have read today:
"The great oil shock of 2008 is bad enough for us. It poses a mortal threat to the whole economic strategy of emerging Asia."
"Last week the seriousness of our economic predicament became palpable. There was a string of bad economic news but for many people what really struck home was the company news."
"Companies such as Tanfield, which have had their share prices puffed up during a bull market, typically see their stock tumble when economic conditions deteriorate and investor sentiment turns for the worse. Aim is riddled with Tanfields and these companies are in for a very tough time over the coming months."
In a depressing round of news I have read about the AIM market on the point of implosion, China ready to 'blow up' because of the oil price and the UK housing market is melting down along with the prospects for huge unemployment. The worst news of all is that this will go on for the next five years!
It is hard to argue with some of the analysis that goes behind these stories but some you take with a pinch of salt. What is making the difference for me at the moment is the general feeling you get talking to everyday people. My wife is astonished at the rise in prices across the food sector. She is a very good cook (which accounts for my wasteline) and publishes a blog of her recipes. This blog is infinitely more popular than mine and gets about 10,000 hits/ month. It has become an interesting barometer of the 'housewife' market. A year ago such recipes as 'Beef Wellington With Truffle Sauce' were among her top posts, now she is seeing the top posts amongst 'low-cost' meals.
I am sure this method of market analysis will not enable me to start a hedge fund off the back of it, however, it is one indication that hits home in real terms.
Regular readers may know that I have just bought an SUV (doh!..I know). I have owned a string of environmentally unfriendly cars and have never concerned myself with gas prices. Having just seen the gas price here go from CHF1.80 to CHF2.02/litre in just two weeks, it is hitting home. I have even done the maths on taking my boy to school vs school bus... Costs me CHF1500 a year to take him vs CHF650 on the bus. Next term he takes the bus.
I bought a Skype/Landline phone. Basically it replaces our home phone and home office phone and is connected to my Skype account. This will save about CHF300-CHF400 per month. A fair chunk of change.
Articles in newspapers across the board show similar concerns for people in their everyday lives.
Andy Woods a local hotelier and brewer in Suffolk says "I think people's moods have changed. I think they are becoming more concerned about how they provide the basics in their lives. East Anglia, and Suffolk in particular, are very rural economies. We have lots of businesses in rural situations, and throughout East Anglia we are seeing fewer cars on the roads, for instance. That's just one example. There are fewer people going to pubs and they are also spending on different things."
Sarah Ramsay, 23, a PA from Croydon, says: "I'm worried about how expensive my sandwiches are. I've definitely noticed a difference in food prices. I'm making my own sandwiches now or going to a supermarket like Sainsbury's down the road."
"I think it's good quality stuff in Marks & Spencer, the sandwiches are a lot better than the big four supermarkets. But I'd rather bring stuff from home for lunch to save money," says Will Dawson, 24, from London.
UK householders were last week warned, by the Bank of England no less, that living standards will have to fall for at least a year and by the Organisation for Economic Co-operation and Development (OECD) that redundancies will grow by 100,000 over the next two years. Oil on Friday hit yet another high at $145.85 a barrel, adding to inflation and squeezing incomes further. Not surprisingly they're now asking just how long will this slowdown last and how bad will things get?
I think the answer, sadly, is much, much worse. I remember trying to explain to younger friends who have gorged on property as their route to riches, that there was a time, not so long ago, that you could not 'give' property away.
Houses that a couple of years ago were on the market for millions were on the books of estate agents for months on end at a price of £200,000 in the early nineties. The response from these friends, which is perpetuated by housing and makeover shows, is 'you should have bought it. property never goes down'. Clearly I should have bought it, but sold it when these guys entered the market. This will be a hard lesson for some people in the housing market.
We wrote an article here back in October discussing how hedge funds were shorting the housing market and how 'buy-to-let' was a disaster waiting to happen. We take no joy in being right and make no claim to have prophesized it... the writing was on the wall from many newspapers and market commentators.
But like any crazed market, from tulips to tech stocks, the housing market in the UK had to see a dive.
OK.. so I have depressed myself and, no doubt, you enough so where is the good news?
Well the good news is this. We are seeing a correction, a full-on pressing of the panic button across the whole market. I do, however, prefer to see it as a 'restart' button.
How many of you have watched in awe at the rise of the markets? How many of you have looked with envy at the profits made by hedge funds and investors over the last few years and kicked yourself that you weren't in the game? How many times have you looked back at just how much cash you would have made if you had invested in this company or that company, or bought yourself a portfolio of property?
Well, my friends, just like my son pressing the 'restart' button on a game he losing, we are there now.
Banks, property, tech, everything is dropping like a stone, back to levels not seen for years and this opens opportunities that I was unsure that we would see again.
The credit crunch has created a time machine, rolling back prices of stocks and assets, it has sanitized the markets of the raving punters who have overvalued stocks to the point where value disappeared and it has given us all a second chance.
Doom and gloom maybe rife, but I remember the words of an old client who made a fortune from contrarian investing;
"There is always money to be made in a war zone" he was fond of saying.
Call it recession, correction or crash, one thing is for sure, we are in a financial war zone and the stories we will tell on this blog in a couple of years time will be of those who looked at the 2008 glass as half full....
It is hard to argue with some of the analysis that goes behind these stories but some you take with a pinch of salt. What is making the difference for me at the moment is the general feeling you get talking to everyday people. My wife is astonished at the rise in prices across the food sector. She is a very good cook (which accounts for my wasteline) and publishes a blog of her recipes. This blog is infinitely more popular than mine and gets about 10,000 hits/ month. It has become an interesting barometer of the 'housewife' market. A year ago such recipes as 'Beef Wellington With Truffle Sauce' were among her top posts, now she is seeing the top posts amongst 'low-cost' meals.
I am sure this method of market analysis will not enable me to start a hedge fund off the back of it, however, it is one indication that hits home in real terms.
Regular readers may know that I have just bought an SUV (doh!..I know). I have owned a string of environmentally unfriendly cars and have never concerned myself with gas prices. Having just seen the gas price here go from CHF1.80 to CHF2.02/litre in just two weeks, it is hitting home. I have even done the maths on taking my boy to school vs school bus... Costs me CHF1500 a year to take him vs CHF650 on the bus. Next term he takes the bus.
I bought a Skype/Landline phone. Basically it replaces our home phone and home office phone and is connected to my Skype account. This will save about CHF300-CHF400 per month. A fair chunk of change.
Articles in newspapers across the board show similar concerns for people in their everyday lives.
Andy Woods a local hotelier and brewer in Suffolk says "I think people's moods have changed. I think they are becoming more concerned about how they provide the basics in their lives. East Anglia, and Suffolk in particular, are very rural economies. We have lots of businesses in rural situations, and throughout East Anglia we are seeing fewer cars on the roads, for instance. That's just one example. There are fewer people going to pubs and they are also spending on different things."
Sarah Ramsay, 23, a PA from Croydon, says: "I'm worried about how expensive my sandwiches are. I've definitely noticed a difference in food prices. I'm making my own sandwiches now or going to a supermarket like Sainsbury's down the road."
"I think it's good quality stuff in Marks & Spencer, the sandwiches are a lot better than the big four supermarkets. But I'd rather bring stuff from home for lunch to save money," says Will Dawson, 24, from London.
UK householders were last week warned, by the Bank of England no less, that living standards will have to fall for at least a year and by the Organisation for Economic Co-operation and Development (OECD) that redundancies will grow by 100,000 over the next two years. Oil on Friday hit yet another high at $145.85 a barrel, adding to inflation and squeezing incomes further. Not surprisingly they're now asking just how long will this slowdown last and how bad will things get?
I think the answer, sadly, is much, much worse. I remember trying to explain to younger friends who have gorged on property as their route to riches, that there was a time, not so long ago, that you could not 'give' property away.
Houses that a couple of years ago were on the market for millions were on the books of estate agents for months on end at a price of £200,000 in the early nineties. The response from these friends, which is perpetuated by housing and makeover shows, is 'you should have bought it. property never goes down'. Clearly I should have bought it, but sold it when these guys entered the market. This will be a hard lesson for some people in the housing market.
We wrote an article here back in October discussing how hedge funds were shorting the housing market and how 'buy-to-let' was a disaster waiting to happen. We take no joy in being right and make no claim to have prophesized it... the writing was on the wall from many newspapers and market commentators.
But like any crazed market, from tulips to tech stocks, the housing market in the UK had to see a dive.
OK.. so I have depressed myself and, no doubt, you enough so where is the good news?
Well the good news is this. We are seeing a correction, a full-on pressing of the panic button across the whole market. I do, however, prefer to see it as a 'restart' button.
How many of you have watched in awe at the rise of the markets? How many of you have looked with envy at the profits made by hedge funds and investors over the last few years and kicked yourself that you weren't in the game? How many times have you looked back at just how much cash you would have made if you had invested in this company or that company, or bought yourself a portfolio of property?
Well, my friends, just like my son pressing the 'restart' button on a game he losing, we are there now.
Banks, property, tech, everything is dropping like a stone, back to levels not seen for years and this opens opportunities that I was unsure that we would see again.
The credit crunch has created a time machine, rolling back prices of stocks and assets, it has sanitized the markets of the raving punters who have overvalued stocks to the point where value disappeared and it has given us all a second chance.
Doom and gloom maybe rife, but I remember the words of an old client who made a fortune from contrarian investing;
"There is always money to be made in a war zone" he was fond of saying.
Call it recession, correction or crash, one thing is for sure, we are in a financial war zone and the stories we will tell on this blog in a couple of years time will be of those who looked at the 2008 glass as half full....
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