This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Everyone wants to be the person who predicts the next financial crash. I see this every day. One day, of course, a bunch of people will be correct – call heads enough times and, eventually, heads it’ll be. The thing is, at the moment things are very much ‘Tails’ and it’s hard to envisage anything different in the near term.
My message right now is: Don’t worry, be excited! The latter half of August has been predictably quiet because, believe it or not, people go on holiday in the summer. Next month, traders and investors are set to return, bringing some much missed volume back to the equity markets. Why equities in particular? Because this is effectively the only place left in which can be found those all-important returns we all love, and ‘returns’ is the reason you invest, right? Right!
September often sees a pickup in stock market activity, and with global monetary policy herding all the big investors towards stocks rather than bonds, many are seeing the summer’s equity market gains as set to continue in the absence of more radical, extreme and unprecedented central bank tactics (like the appropriately named ‘helicopter money’). The central banks are very clear that they’re loathe to move down such a path. If indeed they don’t, then the story remains the same: Equities are providing the best opportunities to realise healthy returns on investment.
Equities are not just a capital returns play either. Yet more volume could be on its way in the form of (sun seekers turned) income seekers. You may be surprised to learn that 75% of the UK 100 ’s blue chip companies currently have dividend yields of 2% or more. 2% is not that much, but I’m sure you’ll agree that it’s much better than the 0.8% you might get from a 2-year fixed rate cash ISA. And what if I told you that a dividend yield of 5% or more is obtainable from 20 of the 100 companies in the UK Index blue chip index? Would that be enough to tempt you into at least having a look at stocks as a potentially profitable investment opportunity? If it is, then you should investigate just a little bit further and sign up to receive our daily research and trade ideas for two weeks here. In fact, that’s all you need to do. Our in-house team of analysts and commentators will do the rest.
A largely flat week on the global indices has come as market participants shy away from opening positions before they’ve heard what Janet Yellen has to say this afternoon – just in case she says something really juicy. That’s unlikely to happen, but granted we may well see a flurry of activity in the minutes during and following her appearance at the Jackson Hole Symposium. Once that’s out of the way, however, it should be back to business as usual. Record highs on the UK 100 by the end of September? Watch this space from the comfort of your inbox with our free, no-nonsense research.
Tom Soanes, Trader (26 Aug)
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