Our view is that the stock market will remain volatile for the foreseeable future and the sudden dips and spikes will offer buying and selling opportunities for fund managers to enhance performance over the medium to long term.

The fundamentals show that the UK stock market is at similar relative value in terms of price/earnings ratios and dividend yields, to the decade low in March 2003.  Therefore, value represents opportunity and we suggest that now is a good time to invest, or increase stock market weighting within portfolios on a year to 18 month view.

With a substantial correction in UK Commercial Property values in 2007, this sector is beginning to look as if it has reached the bottom, although there may be additional write downs this year.

The old adage of ‘buy low, sell high’ remains firm.

During the second quarter of 2007, it became apparent that financial institutions around the globe were embroiled largely unwittingly with the problems of the US housing market.

Thousands of US homeowners had taken up fixed rate mortgages at extremely low rates in 2005 when the Federal Reserve had interest rates at low level of around 1%.  Two years later when these homeowners came off their fixed rates and went onto much higher loan rates they could not afford the repayments and lost their homes.  This, combined with an already over supplied and falling housing market led to the implosion that followed.

So, how does all this affect us here in the UK?

Well, it’s all about the big ‘money-go-round’.  You see, banks lend money to each other, but that money is only as safe as the other bank to whom they lend.  UK and other banks around the world were lending money to US mortgage companies that had huge exposure to the ’sub-prime’ mortgage market.  When the sub-prime bubble burst and those mortgage companies went into liquidation, the banks around the world that lent the money to them lost their money and had to write it off as losses.

Subsequently, banks are trying to raise money to bail themselves out by issuing bonds (and no doubt we will see ‘rights issues’ in the near future), but due to the current uncertainty in the markets they are having to pay a much higher yield to investors.  Barclays have recently issued a bond at 8.25%, which is good for investors, but will stay on Barclays balance sheet and will reduce the company’s profits for years to come.

Furthermore, the banks in particular have had billions of £’s wiped off their share prices.  You can buy Royal Bank of Scotland shares today at 330p.  This is a company that has a history of paying a healthy and rising dividend to investors and over the last year has paid a dividend of 30.20p, which equates to 9% of the current share price.  A similar story can be told about many large companies at present.

The point is that the stock markets react on emotion in the short term and on fundamental value in the long term.  I don’t doubt that companies will make less profit over the next few years, but with a dividend yield of around 4% across the FTSE All Share right now, there is good value to be had.  When the bad news is all out and companies have drawn a line under their sub-prime mortgage exposure, investor sentiment will return to the fundamental good value rather than being swayed by emotional uncertainty.

Although this has been a torrid time for investors across the equity and property markets, it has given rise to numerous buying opportunities for investment fund managers.

Those investors that have the courage to hold tight in the knowledge that their long term investment strategy will deliver, and those new investors in the market, will do well over the next two years and beyond.

We are not out of the woods yet and there may be some more turbulence to go through this year, but the worst is over.

This milestone has been reached on schedule as a part of our firm’s commitment to continuing professional development of personnel and enables the firm to apply for authorisation from the Financial Services Authority to act as ‘Discretionary Investment Managers.’

Most retail based (dealing with the general public) IFA’s are advisory firms, which means that they are not able to switch or move client money without client authority.  This leads to the IFA missing out on short term opportunities in the markets.

As Discretionary Investment Managers, Watermark Financial Solutions Ltd. will be able to take advantage of such opportunities with the intention of enhancing investment performance and reducing portfolio volatility for clients, and all at low cost relative to larger instiutional managers.

Boiler rooms are where slick telesales people make their calls from in an attempt to sell shares in non existent companies, effectively taking money from unsuspecting individuals and providing a share certificate that is absolutely worthless.

The BBC state:

‘Boiler rooms are staffed by teams of salesmen who cold call unsuspecting investors to offload worthless investments. They use a mixture of telephone bullying and sophisticated sales tactics gleaned from legitimate business.

Working Lunch viewers Ken and Barbara Fudge from Dorset are among the thousands who have already been targeted this year. They paid £40,000 to a share salesman who phoned out of the blue from Luxembourg.’

Our advice is to never buy shares over the telephone! 

Read the full article by following this link:

http://news.bbc.co.uk/1/hi/programmes/working_lunch/7375384.stm 

This has been a goal of the company for some considerable time and it is our understanding that we are the first independently owned firm of retail based Independent Financial Advisers in our region that has this authority.

This means that we are now authorised to make investment decisions and action them immediately without first seeking permission from our clients, which will enable us to act quickly and to take advantage of short term market conditions.

As an advisory only firm, which most IFA’s are, we had to obtain consent from clients to switch their money around.  This has long represented a major issue for us because by the time clients respond it can be too late and the opportunity has gone.

There is still some way to go before we can move our clients across to our ‘Discretionary’ service, but we are planning to launch the first phase by the end of July 2008.