Bill Jamieson: Expert guidance on hand to chart course through troubled waters

A recovery from the 2008-09 financial crisis has been stopped dead in its tracks – and reversed. The UK stock market suffered a series of swift and searing reversals, which took share prices down by almost 20 per cent at one point. Diversification into overseas and emerging market funds has offered no escape. A credit rating downgrade for America, growing signs of a slowdown in China, and in the eurozone a sovereign debt crisis that threatens to engulf the continent have drained confidence. The FTSE 100 index, having risen above 6,000 at the start of the year, tumbled below 4,000 at one point. In the past two weeks a tentative, febrile rally has set in. The index has traced a 10.5 per cent recovery in eight trading sessions. Last Friday it gained 63 to close at 5,466.4 on hopes that eurozone leaders are being forced closer towards action to resolve a sovereign debt and banking collapse. But huge doubts attend this rally. Triple-A rated government bonds and fixed interest still appear the best place to be – even though yields continue to be driven down, further adding to investor losses after adjusting for inflation. Sometime over the next 18 months there is likely to be an inflection point, when investors will want to be out of bonds on a calculation that prospects for equities offer a better protection against inflation. Who dare risk being caught out when the prices of bonds and bond funds start to fall? “Where to from here?” is the question on everyone’s lips. And that is the title of an unmissable investment event hosted by The Scotsman at the Hilton Edinburgh Grosvenor on Wednesday, 16 November. The event has been tailored with private investors especially in mind. It will bring together five of today’s most outstanding and perceptive fund managers and market commentators. Together, they represent investment institutions and funds totalling more than £500 billion. And the questions they will be addressing go direct to the concerns of anyone who has investments or is planning to invest in the near future. What is the outlook for global bond markets and bond funds? How long is their strong outperformance likely to last? Where, round the world, is a recovery likely to be strongest and which international markets offer the best prospects? What can market history tell us about the volatility of recent months, and what is it that charts and graphs can tell us about future trends? What is the role of gold in wealth protection? To address these questions, and more, The Scotsman has brought together a sharp and insightful panel to bring the best analysis to bear on the outlook for bond and equity markets, here and across the world. The panel will comprise Andrew Milligan, head of global strategy, Standard Life Investments; Robin Angus, director, Personal Assets Trust; Mike Lenhoff, chief strategist, Brewin Dolphin; Paras Anand, head of European equities, European Assets Trust, and Mike Turner, head of global strategy and asset allocation, Aberdeen Asset Management. I will be in the chair and making sure the discussion is topical, paced and to the point. This is a “must” date in the diary for private investors, professionals engaged with the financial services industry, independent financial advisers, accountants and solicitors. For more information, please e-mail conferences@scotsman.com, or give our events team a call on 0131 620 8656. What all those zeros really mean Have we become so befuddled over all these noughts in figures for government deficits and debt that we no longer comprehend their meaning? Many have suggested that western voters are numbed by such large numbers and unable to take them in. I am grateful to Michael Westmacott for sending me this excellent guidance note penned by a US law firm on converting US government debt trillions into household numbers we can all understand. Numbers such as the US debt ($14,271,000,000,000) and the recent budget cut ($38,500,000,000) make more sense when the last eight noughts are removed. The “family budget” picture for Mr and Mrs Jones is now thus: Jones Income $21,700 Jones Spending $38,200 New Debt added to credit card $16,500 Outstanding on credit card $142,710 Amount cut from budget $385 So far, Mr Jones has cut just $385 of spending to resolve $16,500 of new annual deficit spending. Remember Mr Jones is only in this mess because he has consistently failed to pay in sufficient funds. In this latest year, his repayment to his card company should have been over 40 times more. Little wonder the credit rating was downgraded.