Newsletter
June 2005
A few summery days and the market
slips into heat induced torpor. I am losing count of the trading days that end
with single digit movement. However within that narrow variation some sectors
have registered significant upticks and should be watched. The UK election
result turned out as expected but obviously many voters would have felt cheated
with such a small minority gaining sufficient seats to allow the Government a
comfortable majority of seats. A travesty some would rightly decide.
The big ‘NON’ in France was fairly
predictable perhaps, especially for pessimists and the Euro suffered, but this
week much new data is eagerly awaited from the US. Significant figures are also
being generated in other parts of the world. Japan for instance is at a six
year low for unemployment which can’t be bad. Depending on your frame of mind
local financial trends in the UK are a little equivocal, but the main UK banks
have all reported higher incidence of bad debts. Bad news in anybody’s book..
Since my report in May, oil prices have moved little and gold has fallen by
about $20, an inverse reflection of the rise in the dollar. One report
mentioned how oil inventories of the North Eastern USA were at their highest
for ages, just at the right moment for the driving season. Good news for them.
The FTSE itself has staged a bit
of a recovery in the last three weeks even if some daily movements have been
trivial. In sectors, the winners since Jan 1st have been Electricity (+15%), Pharmaceuticals & Biotech (+14%)
and Aerospace & Defence (+12%). Worst fallers have been Information Tech Hardware (-18%), Household Goods &Textiles(-16%) and Steel & Other metals (-10%). How are the mighty fallen?
After last months retreat for Persimmon and the housebuilders they have all bounced back strongly to go well ahead.
The last meeting saw us actively trading. We took advantage of the Taylor Woodrow share price to increase
our previous tiny holding for the express purpose of selling at a profit in the
short term. Hamworthy was also
considered worthy of accumulation and this week we have seen the latest results
issued which seem to suggest a rosy future for the company. Let’s hope so.
Optimistically, perhaps, we decided to watch Persimmon and Synergy to
try and catch them at bargain prices. It was not to be. So we shall have to
wait a little longer for a potential ‘bad news trigger’.
Airpartner was a strange situation and had caused us a lot of
deep discussion at the May 19 meeting. Having argued ourselves to a standstill,
the 510 S/L was confirmed and shortly afterwards the share was sold at a
profit. It promptly bounced up with the market to a more normal level. Umm.
Speak of the devil. I mentioned Lastminute.com last time and a bid sent the share wildly higher. With a bit of
luck I will be able to exit with a profit after my accumulation in January. The
Stepstone price, also mentioned, hit
another new high this week of 51 ¾ Norwegian Kronor. Now how much is that
kronor worth? Sadly I only have 10 of the consolidated share in the portfolio.
Other shares to hit new highs last week were :- Rolls Royce, Taylor Woodrow and Arla
amongst others. A total of 61 highs to 27 lows.
Since we have an interest in Commodities I saw that Copper has been peaking again. Close to
it’s 17 year high, which it reached in January. Last week, the London Metal?
Exchange began to trade futures in an entirely new medium, polypropylene,
believe it or not. They also do linear low-density polyethylene too. That’s
LLDPE for short.
Interest rates have taken a back seat for a while but I daresay
they will reappear when we least expect an unpleasant surprise. Interesting
that a soft landing is now thought the probable scenario for house prices after
recent weakness. We shall see.
I hope I leave on a high note
tonight with the FTSE surging through the 5000 barrier. Good investing chaps.
ML June 1st 2005