Shares and Investments Alert: Should You Buy Shares as FTSE100 Tops 5,000?
If you're looking to make your investments work harder, you're probably not short of investment advice already. As the blue-chip share index roars back above the 5,000 mark, many stock brokers, independent financial advisers and banks are urging investors to return to the market and immediately continue investing by buying shares now, before it's too late.
London, United Kingdom, October 02, 2009 --(PR.com)-- Investors Chronicle (IC) is the definitive investments specialist website offering investment advice on all types of shares and financial investing.
www.investorschronicle.co.uk doesn’t doubt that the worst of the recession is now behind us and that a return to 1930s-style depression and deflation is no longer very likely. The sheer scale of the policy response to the crisis that began a year ago today with the collapse of Lehman Brothers virtually guarantees that. Governments and central banks have poured money into banks and investment markets, slashing interest rates and buying up bonds to put money back into the system. The IC has been analysing stock markets and providing investment advice since 1860, and there probably hasn't been a policy response on this scale since the Marshall Plan.
But the response itself could be storing up problems for the future. Most of the money that the Bank of England has "created" under quantitative easing has been spent buying UK government bonds - gilts. The Bank isn't a long-term holder of these. At some point, they'll have to be sold back into the investment markets. With so much government debt on offer, the government will have to offer higher interest rates to lure buyers for new debt - and that higher 'yield' will indirectly affect the price of other investments like shares.
And in order to finance the interest bill on this debt, public spending will have to be cut and taxes will have to rise. If emerging markets like China start to recover before we do, then commodity prices will start to go up and that will increase inflation. In order to keep inflation in check, interest rates will need to rise. All of these things together will put pressure on consumption and investment - and that will make it more difficult for banks to lend, and for companies to invest and grow.
If banks aren't lending, companies aren't investing, and individuals aren't spending, then there's not much growth going on - and that means companies will struggle to increase their profits. Investment analysts have assumed fairly strong company profit growth for 2010, but they might yet have to rethink their advice depending on the way the financial year moves forward.
What should you do with your investments? Investors Chronicle believes that while shares are unlikely to collapse, there isn't much more gas in the tank.
Their invaluable investment advice is to be very selective about which shares you invest in - avoid companies with high debt levels, or ones that have posted spectacular recoveries, and look instead for companies that will do well even in an environment of low growth and still-rising unemployment.
Sectors that meet these investment criteria include food producers, supermarkets, drug companies and utilities - the so-called 'defensive' sectors.
Investors Chronicle has been providing private investors with weekly stock market analysis since 1860. This makes it one of the oldest magazines in the world.
Investors Chronicle is available weekly on the newsstand and via subscription and daily online at www.investorschronicle.co.uk with an IC Advantage subscription.
To find out more about investing, share tips and investment advice visit:
www.investorschronicle.co.uk/Offers
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www.investorschronicle.co.uk doesn’t doubt that the worst of the recession is now behind us and that a return to 1930s-style depression and deflation is no longer very likely. The sheer scale of the policy response to the crisis that began a year ago today with the collapse of Lehman Brothers virtually guarantees that. Governments and central banks have poured money into banks and investment markets, slashing interest rates and buying up bonds to put money back into the system. The IC has been analysing stock markets and providing investment advice since 1860, and there probably hasn't been a policy response on this scale since the Marshall Plan.
But the response itself could be storing up problems for the future. Most of the money that the Bank of England has "created" under quantitative easing has been spent buying UK government bonds - gilts. The Bank isn't a long-term holder of these. At some point, they'll have to be sold back into the investment markets. With so much government debt on offer, the government will have to offer higher interest rates to lure buyers for new debt - and that higher 'yield' will indirectly affect the price of other investments like shares.
And in order to finance the interest bill on this debt, public spending will have to be cut and taxes will have to rise. If emerging markets like China start to recover before we do, then commodity prices will start to go up and that will increase inflation. In order to keep inflation in check, interest rates will need to rise. All of these things together will put pressure on consumption and investment - and that will make it more difficult for banks to lend, and for companies to invest and grow.
If banks aren't lending, companies aren't investing, and individuals aren't spending, then there's not much growth going on - and that means companies will struggle to increase their profits. Investment analysts have assumed fairly strong company profit growth for 2010, but they might yet have to rethink their advice depending on the way the financial year moves forward.
What should you do with your investments? Investors Chronicle believes that while shares are unlikely to collapse, there isn't much more gas in the tank.
Their invaluable investment advice is to be very selective about which shares you invest in - avoid companies with high debt levels, or ones that have posted spectacular recoveries, and look instead for companies that will do well even in an environment of low growth and still-rising unemployment.
Sectors that meet these investment criteria include food producers, supermarkets, drug companies and utilities - the so-called 'defensive' sectors.
Investors Chronicle has been providing private investors with weekly stock market analysis since 1860. This makes it one of the oldest magazines in the world.
Investors Chronicle is available weekly on the newsstand and via subscription and daily online at www.investorschronicle.co.uk with an IC Advantage subscription.
To find out more about investing, share tips and investment advice visit:
www.investorschronicle.co.uk/Offers
###
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Investors Chronicle
Jonathan Eley
08448 480 106
http://www.investorschronicle.co.uk
Jonathan Eley
08448 480 106
http://www.investorschronicle.co.uk
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