Sun, 11-May-08

Investment Focus - A Time To Invest

by Peter Cherry
http://www.investmentwarehouse.com

Although there would seem to be no definitive end to the war in Iraq, in other words, we doubt that a Peace Treaty or Surrender will be signed, the defensive positions adopted by the markets should be jettisoned. Investors have perhaps focused too heavily on what is really a minor skirmish (when compared to, say, Vietnam) in the Middle East as being the reason that markets have been in the doldrums recently. There are much more major problems facing both industry and nations around the world, but, for many people there is at least some good news for once and that should send investors back to the marketplace.

So, is it a good time to buy? The short answer is a definitive Yes, though with a word of caution. Immediate economic and earnings outlook is fairly weak though beneath the surface there are positive signs. We should expect some sort of sustained rally in the short to medium future though this could be followed by a continuation of the bear market. In essence, make hay whilst the sun shines, but be prepared to adopt a change of strategy at some point in the future.

We can also expect a flow of cash towards the US Dollar and a realisation that post-war booms are not uncommon. Having said that, realise that the periods after WW1 and WW2 required the rebuilding of several huge nations, not just one medium sized one.

So far as alternative strategies go there are a number of areas that we currently like. These include Emerging Market Debt, China and Eastern European equities and hedge funds (such as the Man Ip Arbitrage Strategies that has given consistently good results and substantial returns). We also favour commercial and residential income property funds in the United Kingdom and Europe.

Our forecasters predict an upside for most of the major indices and Latin America, Israel, Software, Telecomms & Communications sectors, construction engineering, biotech and financials. Notable downside predictions include Korea, Poland, South Africa, airlines, tobacco, and auto components.

InvestmentWarehouse.Com has a strategy for both adventurous and cautious investors who require value for money through discounted charges and a huge range of funds from which to choose. So long as the investor defines the amount of risk versus reward that they require this is a pretty good time to get back into the market. Stocks are relatively low in value and the management teams that lead unit trusts and mutual funds are 'lean and mean'. Poorer managers who cannot deliver have been squeezed out, a financial 'survival of the fittest' if you will. Although there are pundits who have not yet called the bottom of the market it is often the better strategy to climb in and await takeoff that to try to grab onto the tail-plane half way down the runway. A kind of aeronautical 'don't miss the boat'!

Courtesy of http://www.investment-index.com