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Market Comment - August '08

August 2008

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

It has been a remarkable month. For one week two key trends of the last year or so turned on their heads, with bank shares up and commodities down. Within a few days the banking sector was down 25% and then up over 30% (although more recently the banking sector has lurched down again).  As we anticipated last month, the oil price has turned down, reflecting the reality of falling demand in the West plus the likelihood of demand falling in key emerging markets in months ahead. Other commodity prices are similarly rolling over, and the inflation bogeyman is beginning to be exorcised (at least for now).We would expect more days of crazy volatility, so don't be surprised by lower stock market prices before a firm recovery ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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