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

Selftrade mismanage Freedom4 tender

To Update People on the Pipex/Freedom 4 situation, Halifax did their bit and tendered 85% of my shares, Selftrade on the other hand, mismanaged it and only did 58%, despite me knowing a huge number of their nominee shareholders didn't put their tenders in in time.

I complained about the fact they only tendered 58% when I specifically said tender ALL or as much as possible. The official written reply is :-

"Unfortunately we do not have direct access to the Halifax to substantiate your claim that they tendered 85%..."

Not impressed.

Should Britain Join the Euro

I used to be strongly in favour of a single European currency, and my partner is from the continent, but after living over there for 3 years, I've completely revised my opinion.

Culturally, Europe is much more socialist and controlling, when compared with the historic British attitude of an island nation based on international trade and financial freedoms, as evidenced by our reputation as one of the best places to conduct international business, and our base as the world's leading financial centre.

Using the old dictum that "he who controls the currency controls the nation", by giving up the national currency, you are also giving up much of the control and handing it to another power, with vested interests of its own.

Fortunately, at this point in time, most Britons realise this and are opposed to the single currency. We all know this, so why even bother going to the expense and hassle of a referendum?

iWebsharedealing

I set up iwebsharedealing.blogspot.com with the intent of discussing the service (good and bad), provided by iwebsharedealing. I have an account there myself, and now they'd started offering PEPs, I'd been considering switching, but waiting for a good offer.

In the meantime, Google have blocked the blog iwebsharedealing as a potential spam blog. oh well. can only see what they hit upon in the end....

Freedom 4 Tender Offer Messed Up?

The last ailing moments of probably my most disastrous investment ever, Pipex Communications, aka Freedom4 Communications, has not yet ended.

Recently, the company announced a "return of cash to shareholders" by way of special tender for up to 58% of your holding. Sounds simple enough, although really it was a special dividend, since the value of the remaining shares, holding only the Freedom4 joint Wimax venture with Intel and a 3.6 spectrum licence, has been disregarded by the stock market as worthless.

Anyhow, I'm with Halifax and Selftrade on this one, and Halifax got the notification out at least a week earlier than Selftrade. First issue is that many of Selftrade nominee holders are angry at this short deadline of only 2 days to get their reply in, which meant they missed it and have hence seen an 80% drop in the value of their investment!

I'm not impressed either, even though I did get my instructions in, since in my reply I deliberately stated that I wanted to tender ALL, in the event of other holders not taking up the option, yet they have only taken 58% of my holding offline. Ironically, if I had managed to tender the lot at 10p, it'd have been a decent profit, despite the rubbish performance of this one.I used to be impressed with Selftrade, but their offering is falling way behind iweb, especially for ISAs.

Secondly, we come to the Halifax, where my instructions were in well before the date. As of today, mine and many others have seen their entire holdings reappear in their Halifax account, with a huge red mark indicating the whopping 80% loss.

I don't know if this is just an administrative mistake, but I hate to think they "forgot" to tender my instructions.....I await to see if my money appears. These administrative errors could prove to be expensive.......

CHEAP LAPTOP OFFER

3 of my favourite things in the entire world are :-

1) Shopping online at reputable net stores
2) Getting a bargain
3) paying NO Sales Taxes to Greedy Goverments

And thanks to my contacts in the industry, Play.com, one of the stars of tax-free shopping, have allowed me to pass on this discount code ACER40, which enables you to claim an amazing EXTRA £40 off when you buy an Acer Laptop from them here.

The laptops are available here on the Play.com site and the code to enable the discount on the laptops is ACER40.

The laptop code is only valid against the four products listed and will expire at midnight on Wednesday 26/3/08.

Pipex communications falls by the Wayside

So it's goodbye soon to one of my worst ever investments, Pipex Communications. I'm not usually dragged into hot stocks, but working in Telecoms, I am convinced that Wimax has a big future and when I heard Pipex owned one of the UK Wimax spectrum licences I got a bit overexcited. Not only that, but every seemed rosy since they also had a more respectable hosting side, a blocking vote on the UK Nominet domain name register and a huge business selling domain names, even if you didn't use their hosting.

Sad to say, fast forward two years and the shares are 33% below my purchase price of 9p. The broadband arm has been sold off, and the chairman, Peter Dubens is selling the hosting arm to....ermmm himself, now he's teamed up with Oakley Capital. Interesting! Wonder how much that business will be resold for in a few years time?

Anyhow, us small shareholders have the poor promise of 10-11p for 58% of our shares in a tender offer, with the balance carried forward to loss making Freedom Communications, who remain holding the licence.

My tip is that you remain a holder. People with their shareholdings in nominee accounts may do a lot better than 58% on the tender offer. Reason being that if other shareholders with the same broker do not take up their share, then your share will be pro-rated up.

This approach has allowed me to exit 100% of a company (especially investment trusts), when the tender was for less. I'm not going so far as to say you will get to tender 100%, but you may fancy a small punt to average up.

Self Select ISA deals

Up until recently, Selftrade was my best recommended Self Select ISA provider, but events have overtaken their offering. It first started off when TD Waterhouse undercut them with an offer of no yearly admin fee if your ISA balance was £3,600 or more. Fair enough, but I as still slightly in favour of Selftrade, even then, since they allow investment in ETFs on a regular basis without any dealing fee, regardless of how small the amount invested is.

Now, iWeb has trumped even TD Warehouse, by offering no yearly fee, commission of £10 on lump sum investments (compared to SelfTrade's £25), and to beat it all, the thing of most interest to me is the ability to invest regularly at only £1.50 per share dealing.

How long before Selftrade are forced to move the same way? I'm certainly considering a switch to iWeb.

Having said all that, if you don't deal often and want to invest in ETFs without brokerage fees, you can still get £50 back with this great ISA offer.