The Bear Mart - What To Achieve When The FTSE is Diving
There is an choice article in Investor's Novel this week approximately bear markets. They, akin me, compass noticed that the contemporary crash took the ftse to a lower low-point than the extreme one, which in Dow impression is a indication of a bear market. Nevertheless else than that, the bull-trend has been in order by reason of 2003! that's a enlarged bull trend, and it's getting old, and so I'd expect it to be dying of old-age.
What is a bear market? what does that mean?
It is a gospel of stock-markets that they oscillate in wide waves permanent a scarce second childhood or more. Provided it's a rising trend, it's called bull, whether it's falling then bear. Why act they oscillate? don't know, don't care. They do, and that's the course the cookie crumbles. You'd probably demand a vitality in the conurbation to be indebted why they motion affection that. Suffice for us to differentiate that they do, and that the signals of a bear marketplace bear come apparent. So over the attached approx three age I expect the ftse testament blop until it reaches on all sides of 4000. Then it'll life bullish.
So the awash interrogatory is this: what cause you invest in when the bear bazaar takes clout of the ftse? The conclusive effects is, I'm afraid, to sell everything and mastery a cash position. I myself am using this year's ISA allowance for cash, not for shares. Cash is a decent tool to clasp in a bear market. I will extremely be shifting my pension fund into cash or bonds. There are those who effect spread-betting instead of share-dealing, and to them, it doesn't business if the trend is bull or bear: they can income from both easily. They decent essential to perceive which is in command.
Which sectors perform flourishing in a bear market? Apparently all sectors lose wealth on customary during bear markets. All sectors potency down, forasmuch as you're in a superior way off with cash. As I expected, the fitter sectors are electricity and gas, hose and utilities. Besides excellent are bodily estate, banks and software. Surprisingly, tobacco and pharmaceuticals are not such positive survivors as the aforementioned. Tobacco is normally considered as bad as electricity and gauze in times of weakness, on the contrary de facto it seems it's not so ardent in bear markets. On the contrary if you receive a double o at the tobacco sector charts, they are identical healthy and definitely even bullish, so I fancy tobacco is a defended haven for the later couple of years.
This article draws your control to non-native currencies, as well, notably the Swiss franc. Apparently it has risen in every UK bear and it's avg annualised accumulation during those periods is 13 percent! excluding the interest! brilliant! Further, the Euro seems to arrange equitable as well!
And then there's gold, which is noted as a safe-haven in times of depression. The figures for gold are beneficial on average, on the other hand grandstand play a quota of variance.
So what to do? I reccomend holding any shares you currently own until Apr or May. I expect the ftse to rally to 6300 within that time-period. But, for the devotedness of Gosh, arrange confident you dump your shares in May. I predict there will be CARNAGE on the markets this summer. I suppose the crash will revenue the ftse below 5000!
Buy gold, swiss francs, Euro's. Unlocked spread-betting accounts. If you must dominion equities, moxie for gold-miners (like European Goldfields - decalescent tip) and tobacco (Imperial Tob or Bats is fine) and utilities (like Transco or Scotch & Southern). However still with these equities, wait until the commodious crash before buying them.
Good luck all!
Published: February 13, 2008