STEVEN FORBES
FOR some strange reason the lyrics of the 1980s Bangles hit Manic Monday were going through my head at the start of this week, particularly the chorus: “It’s just another manic Monday, I wish it were Sunday, cos that’s my fun day”.
Now I purposefully do not buy any papers on Sunday or watch the news.
Sunday in my house is wall-to-wall golf and football on the telly and it is a pleasure to have one day away from the worries of the world.
However, this reverie ended when I woke up to the news that the financial world was coming to an end as China’s stock market continued to collapse, and Greece was going to bring about the end of western civilisation by holding a further election.
It would be easy to sit back and laugh at these events being overly exaggerated in their impact ... and I for one see no reason not to do so.
Let’s be honest, you are going to see, hear and read plenty of people saying the opposite.
The popularity of gambling in China is evidenced by the fact that Macau now has seven times the gambling revenue of Las Vegas.
In a bid to encourage individual ownership of shares and boost the market, the Chinese government allowed brokers to extend credit terms to their clients allowing them to gear up their investments.
Gearing is great when markets rise, but disastrous when they fall.
Now, do you think the typical Chinese ‘investor’ will have viewed their money in the market as a long term matter or to make a quick yuan?
The BBC recently interviewed a distraught young Chinese couple who had invested their deposit for a new house on the Shanghai stock market and lost the lot.
Maybe ‘the value of investments can fall as well as rise’ and ‘past performance is no guarantee of future returns’ does not translate into Mandarin.
As for Greece, their version of the hokey cokey is becoming tiresome. Whether they are in, out or shaking it all about I care not a jot, but please come to a decision.
The announcement of a snap election has led to a new party being formed which has promised to be more anti-austerity than the current mob.
It is starting to resemble the Monty Python sketch with the Yorkshiremen trying to outdo one another in how hard their upbringing was.
The truth of the matter is the Greeks want it both ways.
They want to stay in the euro but they don’t want to pay their debts.
As I have said repeatedly, we all know that they will not be able to pay back the money owed, which with each bailout becomes more and more obvious.
So why not just be done with it and default and leave the euro?
The short-term pain they will suffer will be worth it in the long run.
Who knows, maybe that is what they will vote for – but I doubt it.
So what does this mean for you?
Well, no doubt the 24-hour news channels will be rummaging in their cupboards looking for their FTSE-100 web-link as I write this, but these market falls are not entirely unexpected.
It is normal to see short-term falls of up to 20 per cent in rising markets and this one is probably overdue.
The underlying economic fundamentals remain positive and recession is not on the horizon.
So relax and try to enjoy the remainder of the summer.
If you have money available
to invest for the longer term, doing so now, while the actions
of 1.2 billion novice ‘investors’
are having a greater impact on global stock markets than they deserve to, could be a shrewd move.
Steven Forbes is managing director of Alan Steel Asset Management
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