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Market Comment - October '17

October 2017

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.

The 30th anniversary of the 1987 Crash is just ahead and parallels will be drawn in the media in the coming weeks. The essential foundation for a crash was laid by the market running too far too fast – it’s that simple. By August the FTSE-100 index was running 30% above the long-term trend (the 200-day moving average). Right now, it is almost exactly at the level of the long term trend. Yet in 1987 valuations were not extreme, measured by the various versions of the PE ratio. (For the latter reason ’87 was not an investment bubble).This vulnerability had an important second leg. Government bond yields had risen to 10% by the summer – therefore bonds offered roughly the same return as the average long run sto ...

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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.

All material on this website is protected by copyright. You may use Information retrieved from the www.scsw.co.uk website for your own personal non-commercial use which means that you may not sell or copy this information to any third party without prior written consent. ISSN 1358-183X

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