Wednesday 24 April 2013

Market Update

For the first time in years, sentiment in the markets seems overwhelmingly bullish.  While I've participated, to some extent in this bullishness since December 2012, I really can't share that overwhelming optimism that seems to exist.  In fact, I think I can pinpoint where this has happened before.

First the good news, I made major investments in some investment trusts on big discounts last year and it has paid off ultra-handsomely.  The JP Morgan trio of UK Smaller, European Smaller and Japanese smaller were all on 18%+ discounts in the summer and autumn of last year, which helped me think counter-intuitively and let the discount help me realise I must be getting a fair deal, despite all the negative sentiment.  Now, Japan Smaller is up an amazing 50% since then, with Euro and Uk managing 30-40%.  Couple that with picking up Henderson Opportunities on a 25% discount and the share portion of my portfolio has zoomed away.

Now the for the not so good news...

Gold is down and the miners have got slammed.  GPM (Golden Prospect Precious Metals) has been a dog.  So there's some of the gains elsewhere gone.  My mistake is I reckon I was too early with that one.  I'll continue the monthly investment because gold will have it's day again, which brings me nicely to the point in history this reminds me of.  In 1977-78, world stock markets flew away exactly the same as they are now.  Furthermore, gold and silver experienced falls and stagnation, many even sold out, so I read, believing the economy was fixed and the boom was over.

It wasn't.  In 1979-80 gold and silver flew into the stratosphere and the miners followed suit.  Shares tanked and remained low until 1982 when someone finally did what needed to be done to restore faith in the financial system.  Right now, I don't see any such person with the same convictions on the horizon.  In fact, all I see are inflationists, Keynesians and a load of gold-diggers in it for themselves.

That's why I think this "recovery" is fake.  Also, where are the dividends to back up this growth in share prices?  The ultimate irony of this must be that a lot of the high payers in the oil and minerals sector are the ones underperforming.  Hence the FTSE has not boomed as it might.

So, don't sell your precious metals.  I won't be selling my shares yet either.  Investment trust discounts on my selections are not narrow enough yet to indicate a market top.  Ok it's never a perfect signal, but it's the best one to go on...

Friday 19 April 2013

Bitcoin

I'm currently watching Bitcoin from afar, but I do see the rise of digital currencies, independent of government as a thing of the future. In fact, Bernard Lietauer talked about community currencies existing alongside gold in his book many years ago and that's what got me interested in this whole thing in the first place. I guess Bitcoin does fulfill many of the criteria defining true money, such as limited quantity and infinite divisibility but it is lacking one thing....(call me a traditionalist here)...asset backing. Long term, my money (now there's a paradox..!) is on the rise of one or more online digital currencies backed by gold and silver. Bitgold and BitSilver, anyone?

Sadly, governments and whoever else benefits from controlling the national currencies will do anything they can to maintain the status quo. So until it becomes mainstream expect many more stories about people using Bitcoin to buy guns or drugs and evade their "social responsibility" via taxes. Conveniently neglecting to mention that one of the most common ways to buy guns or drugs is a suitcase of dollar bills!

Tuesday 16 April 2013

Diversifying Your Portfolio

Sometimes it's worth diversifying your portfolio outside the world of ISAs.  After all, some things can't be held within these accounts : physical gold, silver, property, a lot of foreign shares and...domain names.

Yep, I've been feeling for some years domain names are the ultimate virtual landgrab (more on virtual money such as Bitcoin another day!), but to give you an insight into the kind of domain name portfolio I feel might perform well the next ten years, check this domain name portfolio out.