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Friday Email: 10 October 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:

The markets are still bouncing around all over the place and volatility remains very high. The clothing retail industry is under severe pressure as evidenced recently by Next and confirmed yestereday by N Brown who lowered market expectations for the full year and of course took the requisite tonking from the market, which at that stage was recovering after a big rise on Wall Street. However, the German export numbers were to reverse any short term euphoria and it has to be said they were very bad; down 5% and traders took fright over here and in the US as the Dow fell over 300 points.

The FTSE is now under 6400 and the bull market that everybody has been talking about is apparently over. I am not sure that I have been in a bull market since the run up to the year 2000. The period from 1974 to 2000. That was a bull market and that had the 1987 crash in the middle of it!  The market PE was over 20x and the only asset class being talked about was equities. Although there are some companies that look expensive today, there are an awful lot of companies that look cheap, but there is the fear of some sort of economic argmagedon that, quite frankly is very unlikely with the amount of information at the disposal of Governments around the world. If the data coming through was really that bad, they would just turn on the taps and all of the inflation scaremongerers would be out again. But we have not seen any inflation from QE. The situation is simple. Fear has gripped the markets, but if you look out of your window, life goes on and at times like this you can keep your powder dry, but not for too long. Build up your watch list and start nibbling at the companies that you really like. At current prices, I like the look of Berkeley Group, which has reached my target of hitting its 52 week low. By September 2015 they are going to pay you 180p against a current share price of 2045 reached this morning. That's good.

The week ahead continues the quiet theme in terms of company results with only Bellway, WH Smith and Booker reporting to the market. Don't expect the markets to be uninteresting though. October is never a dull month.

We finished a piece of research yesterday which will go out this afternoon. Our choice fell initially, but is now up on the day which is amazing, given the state of the market.

Only 600 points on the FTSE to go until it reaches the 7000 level touched briefly in the year 2000. Thats some bull market we have seen over the past 15 years.

This email was originally sent on Friday 10 October 2014

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