Thursday, 29 January 2009

Rights and wrongs

In November 2007 I switched my investments from a mix of equities and bonds to cash. The FTSE 100 was around 6000 at the time while the credit markets were tanking; the future did not look pretty.

Turned out the timing was OK - equity markets have since gone down and investors are now pouring into cash. My holdings have gone up around 15%. Lucky me.

So now I'm looking for what next. Corporate bonds are the obvious, but the market has already moved. Might have to wait for the next dip. Equities also look interesting, but have to be oh-so-careful, given the market conditions.

Moreover, equities are getting increasingly risky given the recent spate of equity raisings, which is expected to continue.

Market volatility means share prices are all over the place anyway. Throw in equity raisings, which usually lead to massive falls in share places, and it is even more problematic.

For now, I am being slow about placing my bets and am happy leaving the cash in the bank. Every day of such caution I grow both more impatient and very slightly wealthier.


tom brakke said...

What kind of cash went up 15% over that time, or were there other things in there?

T1 said...

I'm yet to see the detail, but it was a cash fund, so am presuming that the increase has come from the increase in demand for the fund, rather than massive return on investments.

(ie gaining on beta rather than alpha)