Friday Email: 24 January 2014
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
It has been an interesting start to the year so far and one which has reinforced our view that the markets are not going to be easy this year in spite of how bullish politicians are right now. Employment is falling apparently but I know far too many people who have not been working who have never troubled the employment statisticians. My feeling is that companies have drastically under invested over the past five years and as a result there will be some pain in the U.K as countries with longer term thinking and timescales such as the likes of Germany and China reap the rewards of long term investing and strategy. I hope that I am very wrong.
In spite of yesterday's falls the model portfolio has got off to a very good start to the year with both Anglo American and Astra Zeneca up over 10% since the start of the year. Sage are up almost 10% and Admiral, Chemring and Standard Chartered are all up between 5 and 10%. One disaster to report with Ladbrokes down 12%. We have also had creditable performances from British Sky Broadcasting, Imperial Tobacco (who have also gone ex for a big dividend in the period) Sainsbury and Vedanta. During this time the FTSE 100 has gone from 6749 to 6773; not even up half a percent.
Looking forwards we have been saying that visibility over earnings is the crucial factor. The fact that the markets are fretting over whether China's growth is 7.3, 7.4, 7.5 or 7.6% is a red herring in our view. What will really determine the markets performance is earnings growth in the massive economic regions of North America and Europe. So far, from what we have seen, not a great start in the U.S., but not a disaster either. Our time in the UK will come over the next two months, with some activity in the coming week including model portfolio constituent British Sky Broadcasting's interim results.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
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Read next: 17 January 2014
Yesterday we saw a small bounce in mining stocks which have been out of favour for a few years now. Citigroup called them higher and it may well be the start of a return to favour. Difficult to call, but if it is, they have a long way to go. The FTSE 100 underperformed the FTSE 250 by a good margin last year and a big bounce by the miners could see a reversal of that. This will be offset somewhat by those mining stocks that were relegated to the FTSE 250 from the FTSE 100 last year. For those of you that do not understand mining stocks, we favour the Blackrock World Mining Trust which will give you an immediate presence in most of the big miners worldwide including UK favourites Rio Tinto, BHP Billiton and Glencore. Another big attraction of this stock is actually the very attractive yield. In the past two years in spite of the woes of the mining stocks they have paid a dividend of 21p against the current share price of 470p.
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