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TW3 or That Was The Week That Was. Everything seemed to be going sweetly and calmly with the caveat that there were some gloomy tales around, when all of a sudden stockmarkets around the world were going down like dominoes. Shanghaied would be an apt description perhaps. Analysts are now examining the wreckage to try and work out the precise mechanism of factors which made markets tremble, although it seems likely that a combination of factors might be to blame. Looking back it was quite obvious that China and India along with the other BRIC countries and smaller emerging market minnows had had a meteoric rise over 18 months or more and were ripe for a correction. In fact, Japan has also had a steepish rise recently. Within 24 hours of the start of the collapse we had markets down nearly 10% in some cases. The FTSE 100 was down 4.5% on the week, while the Dow had it’s worst week for 4 years.

As I write (Monday 5th March) all markets are still witnessing a strong sell off. So who knows where it will end. I am glad though, the club is heavily in cash, for there will surely be some opportunities for us to increase our exposure to equities once they start bouncing back as on past experience seems likely.

Last month I recorded that markets were hitting new peaks but the froth hit the fan even if they are still higher than 6 months ago. Interest rates are still thought due for one more rise in UK but possibly they will be dropped in the US before the year end.. Japan may raise theirs further which signals curtailment of the carry trade which has made so much profit for many bold international traders. The previous Fed chairman, Mr Greenspan, even uttered the dreaded word recession last week which in conjunction with the housing market woes in the US are significant negative factors. Perhaps all the chickens are returning to roost at the same time!! Most factors have been in focus for several months and I wrote about Shanghai, the carry trade and peaking markets last month, so small wonder that problems have finally surfaced. Last month I warned against investing in mining shares although since that time they have moved up sharply only to fall equally quickly and begin to look like a car boot sale. The sector fell 7.19% last week.

Shares where the club have an interest are showing mixed fortunes. Sadly, Bodycote, where some members had hoped to invest received the expected bid last Friday and promptly advanced 61p which along with it’s earlier rise would have brought useful profits to the club.

Today, while nearly every share is in the red, we have a shining star in UMECO which is a lone riser, although it has been strong of late. (takeover target perhaps).We have seen worrying weakness in LogicaCMG and Northgate in spite of a reasonably positive statement from the CEO of the former. He expressed the intention to concentrate on pulling all the divisions together while eschewing fresh acquisitions. Logica is close to it’s S/L but I would be sad to see it go at this early stage and in the middle of a global sell-off.

As a result of decisions taken at the last club meeting we purchased Ashtead one of my long–time favourites after it finally got the go-ahead. How it will fare in current market conditions is anybody’s guess but a Q3 trading update is imminent.

While the dust settles it seems futile to spend much time trying to get a line on the next direction of markets or shares to consider as investment targets but commodities might move back in focus while some of our recent portfolio purchases could well benefit from accumulations. Persimmon and UMECO might be candidates.

On a personal note I wrote to all members about European Nickel which was a tip received from a friend in the business. So far I am nicely in profit having bought at a temporary low a fortnight ago. Fingers crossed.

In the UK new Highs and new Lows were only recorded for a handful of companies. Specifically 26 new Highs (inc. Bodycote) and 20 new Lows (inc. Patientline). This seems typical of a market on the turn.

Every cloud has a silver lining! Doesn’t it? Trust we have not reached the end of the World. Yet!

ML - Acknowledgements to Daily Telegraph and FT.