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Posted on Thursday, September 17, 2009
It’s 8.20 am on 17 September and the FTSE is currently standing at 5,165, a whopping 47% or so increase in just over 6 months.
As the market rises, so too does the risk and I am concerned about the level of risk in the market at present.
In our May briefing I said: “It is my opinion that once markets get past 4,500 or so I believe that the reality and the implications of rising unemployment will return to the fore. House price falls will continue and dent confidence again leading to the market falling back to 4,000.”
At the moment I am happy to be wrong, and yet yesterday also saw unemployment rise to its highest level since 1995.
Before the March collapse we said we believed that any further falls would simply result in a stronger, quicker bounce back. I believe that at these levels we must be in for a setback and that we will see 4,500 again.
If we do, the bounce back is likely to be quick and strong. Such a setback will be a great buying opportunity but right now is the time to bank some gains and wait for those opportunities.
I fancy Commercial Property. It was the last asset class to fall and it looks like being the last to recovery. I think that recovery could start round about now.
Colin Lawson
Managing Partner
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