QE III

No no, not some new luxury cruise liner, just observing that something weird is going on when the day the Bank of England announces it is going to devalue all existing money in circulation by creating £50bn out of thin air, the financial markets celebrate by increasing the value of the pound against every other currency.

So why is that exactly? Was £50bn less than the markets expected to be created out of nothing, or is the UK creating less new money than every other nation? I have no idea.

Think I will go and buy some silver.

Selftrade ISA Offering - £175 ISA bonus act before 30th April

Selftrade are offering a pretty impressive ISA deal this year, whereby if you invest the full £10,500 in their ISA account by 30th April 2010, you get 10 free trades worth a total of £125 to use during May.

Not only that, but you can boost that by a further £50 by getting me to recommend you. Obviously, I'm more than happy to do this. You can do that by emailing me at alan@doityourselfisa.co.uk using the mail address matching that you want to apply for the account in.

All I can say is, if you're interested act as soon possible. This great offer dies on 1st May 2010. Best ISA offer I've seen so far this new tax year, for sure. In the interests of disclosure I'm happy to reveal that this is where my new ISA money is headed this year, for sure.

The AIGA saga

One of my key recommendations in my ISA Book is the diverse range of stockmarket-listed ETFs run by ETFSecurities. Reason being, that these inventive ETFs allow you to invest in the indexes tracking a wide range of commodities not normally accessible to normal investors such as ourselves. That includes such common staples as Corn, Wheat, Sugar, Cotton, Oil, Gold and Silver.

Long-term, as governments pump more money into the economy, the price of commodities in these devalued national currencies can only rise. And before you think it's only me saying this, then perhaps you'll listen to the opinion of uber-investor Jim Rogers, in his book Hot Commodities.

Well, shock, horror, this week, as AIG, the huge US insurance company faced financial problems of its own. Ah, but what's this got to do with the price of wheat, you may ask? Unfortunately, AIG manages the ETF soft commodity (Wheat, Livestock, etc.) ETFs on behalf of ETF Securites. A complex arrangement that is hard to follow, and created much uncertainty as to whether we'd even get our money back if AIG went under.

When they resume trading, we can probably expect mass redemptions of these ETFs. Here's a contrarian opportunity of ever I saw it. Funds at the ready, because with so many eager sellers, it could be worth taking a punt, because the US Government has already shown an intense desire not to let AIG fail, and anyway, there is guarantee that we would even lose our money if they did. With any luck, we'll see these ETFs trading at huge discounts to NAV. I think it's worth taking a risk, especially since the alternative is British pounds (for me), or exposing myself to the vagaries and fluctuations of our ailing economy through stocks.

Time to put a bit back in?

I was surprised to receive a letter recently for a tender offer for up to 40% of my holding in Fidelity Asian Values Investment Trust. While I'm used to this kind of thing happening, I've never seen it happen to Fidelity before, which probably says a lot about the kind of bear market we are experiencing. While I'm not exactly bullish on the future of the developed western world economies, I'm becoming steadily convinced, especially after the Olympics, that, to twist a metaphor slightly, the economic torch for the new century was passed from the USA to China, just as the UK passed it to the USA at the beginning of the 20th century.

Given all this, it's certainly not time to cash in my holdings in this trust at such a depressed price and also a 6.5% discount on the tender under the Net asset value of the trusts' assets. In fact, there may be some uplift in the share price to reflect the departure of less committed shareholders and a lift in the NAV.

Therefore, I'm recommending this trust as a long term BUY, as long as the discount is ten percent or greater. Even better, Fidelity are one of the trust providers that allow you to invest monthly in their trusts free of any brokerage fees, from an amount as low as £50 a month. Highly recommended.

The Hosuebuilders continue falling

As an aside of yesterday's post, I notice that today Barratt and Redrow have fallen another 16 and 9 percent respectively so far this morning. I don't claim anyone reacted on the basis of my post, as really you should be checking the figures and anybody can see where the UK economy is headed.

I just wish I'd been doing a bit of spreadbetting on the prices falling still further. At 76p, how much further can Barratt fall? The answer could be zero? Is there some major bad news in the offing?

UK Property Price falls

Funny how most of the City fund managers right now have turned "contrarian", and mostly seem to be calling the bottom for housebuilding stocks such as Barratts and Redrow right now. Even stranger still, since you'd expect them to be investing in these stocks, why do the daily prices continue to fall so much? Or are they waiting for others to take the bait first?

In my opinion, these share price drops indicate that reported earnings are going to fall through the floor, possibly coupled with asset value writedowns, as various sites, mainly brownfield have their planned developments deferred. I'm currently staying in a 1-bed flat near Bristol while I work short-term there, and out of my block of 4, 2 are completely empty, and one is up for sale, although at £180,000, reality obviously will take some years to settle in in the second-hand market. How long before the likes of Barratt and Redrow have to do 50% off deals (or buy-one-get-one-free?), simply to shift their current stock of city apartments?

Given the number of years reality may take a long time to set in to the mindset of Joe Public. My guess is 2017 might be the year I'll take the plunge on UK property again. Alternatively, the government might manage to stave off a crash, but if so, don't be surprised if your £180,000 is still worth £180,000, but a loaf of bread costs £50.

If that happens, you'll be wishing you'd invested in Gold and Silver instead!

SUCCESSFUL TAX FREE ISA INVESTING

Time for a sneak inside look at what's covered by the new book SUCCESSFUL TAX FREE ISA INVESTING, by ALAN DUNWIDDIE. Here's the contents page, to give you some idea what it covers :-

• Introduction
• About Isas
• Financial Advisors
• Isas and the Tax-free Myth
• Inflation
• Cash Isas
• Investing in Shares
• Choosing a Broker
• Unit Trust Isas
• Investment Trust Isas
• Exchange-Traded Fund Isas
• Commodity Isas
• Gold Isas
• Bond Isas
• Property Isas
• With-Profits Isas
• Isa Mortgages
• The Future Of Isas
• Summary
• Recommended Resources
• Official Inland Revenue Guidance on Isas