Pound & Euro Saver

So you are keeping buying regularly in the stock markets and you don't try to time the market. Maybe you're right and anyway I won't try to prove you aren't. But here are a few things for you to think about:

Dead cats bouncing

After a big fall share are usually bouncing. I have no idea why this is happening but it happens. Maybe after a big loss you want to think that everything is alright now and things are going to be better going forward.

Look at the FTSE 100 and at the S&P 500. Between the beginning of July and today (12 August) both of them are roughly flat.

So it may not be bad (some traders have very detailed statistics about the historical performance over short period of time for each year relatively to the other year but I don't have them).

But even if they are flat both of these indexes crashed to there 52 weeks low around the mid of July and are bouncing since. Why? I have really no Idea.

• Banks are struggling with ARS. Another of those miracle complex products they sold to their clients a little while ago. They now have to buy them back.
• UBS took another hit
• Jamie "Fortess balance sheet" Dimon, JPMorgan Chase CEO, announced a $1.5 billion loss on mortgage-backed assets in less than two months
• Trichet announced the eurozone was slowing
• The UK is hitting a whatever-year-high inflation
• Asia is not going better
• And so on

So why? Induced effects from some hedge funds inverting their positions after the big July loss?

So where is thing going ?

Already told you. Don't know. But maybe you might want to know this. Some strategist around are forecasting some apocalyptic scenarios (real one with bunnies exploding everywhere. ... ok this is a very personal vision of apocalypse). One very popular SocGen strategist is predicating

• the S&P 500 at 500 (around 1,290 today)
• the FTSE 100 at 3,000 (around 5,535 today)

So if we are on the highway to hell like this, we may be going to lose a pretty big amount of money invested in our retirement account. It is here for the long term so we may be ready to take the risk but we could also be better off with cash. Any thought ?

I seems that I am missing the boat to china while I am investing my personal pension. The FT money this week end was quoting several financial advisers (not independent though) and analysts saying that people should invest massively on China and other emerging markets. I may be right but one of them was so looking forward at being quote by the paper that he ended up saying:

Investors in their 20s just starting to save could even 
consider putting all their monthly contributions into
emerging markets, he added. Once they have
accumulated a good-sized fund they can think more
carefully about asset allocation.

Link to the full article

I am pretty disappointed when I read such a comment. Not investing in China would surely be a very bad idea over the long term but investing my whole money in this market, today or ever, seems to be another bad idea. They are many reasons to be doubtful:

• It is against every diversification principles
• The decoupling many where expecting is obviously not happening
• How is Chinese economy going to react to hypothetically durably high commodity prices
• How will China react to the slowing US economy?
• What will happen after the Olympic Games

Do you feel like taking such a bet? That's a lot of question but even if it is a risky bet it can be highly rewarding.