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Retirement Planning via ISA and Pension contribution

David Harbage — Mon, 12 Nov 2012 00:00:00 GMT

A perennial enquiry put to financial advisors surrounds the relative merits of two prime long term savings vehicles: which is the more attractive, an ISA or a pension policy?

Rocket or damp squib in the Week Ahead?

David Harbage — Tue, 06 Nov 2012 00:00:00 GMT

Yes, irrespective of current purse tightening, it would seem that fireworks aplenty can be expected again this year - based on queues at supermarkets’ designated desks, and by looking up into the sky.

A stormy week ahead

David Harbage — Tue, 30 Oct 2012 00:00:00 GMT

25 years on from our Big Winds

Another 5 non-FTSE100 stocks

David Harbage — Sun, 21 Oct 2012 23:00:00 GMT

As promised, more on individual stocks

UK Equity Commentary - The Week Ahead

David Harbage — Sun, 14 Oct 2012 23:00:00 GMT

Major macro-economic events

Looking beyond the FTSE100

David Harbage — Thu, 11 Oct 2012 23:00:00 GMT

By popular demand, more on individual stocks..

Aggressive UK equity selections

David Harbage — Sun, 23 Sep 2012 23:00:00 GMT

More on individual stocks

Cautious UK equity selections

David Harbage — Sun, 16 Sep 2012 23:00:00 GMT

A focus on individual stocks

Putting ideas into a Portfolio

David Harbage — Sun, 09 Sep 2012 23:00:00 GMT

In response to requests for a portfolio of stock exchange investments - following the educational series of considering the merits and shortcomings of different asset types, and the subsequent review of different business activities - this week’s blog seeks to construct an indicative list of collective investments and company stocks.

The Week Ahead

David Harbage — Sun, 02 Sep 2012 23:00:00 GMT

Major macro-economic events

Trading Investment Trusts

David Harbage — Mon, 27 Aug 2012 23:00:00 GMT

Prompted by the recent news surrounding the financially-challenged Mouchel Group (going into administration), a number of private investors were debating the question of how an investment could be made into smaller (say non-FTSE100 index) sized companies, without incurring the potential risk of losing almost all of one’s money.

The Week Ahead

David Harbage — Mon, 20 Aug 2012 23:00:00 GMT

Taking a look at the week ahead..

Concluding our review of sectors Consumer Services

David Harbage — Thu, 16 Aug 2012 23:00:00 GMT

The conclusion of the Olympic Games, which produced a superb ‘feel good’ to the nation and London in particular, may mark a turning point in investor sentiment.

Rounding up the review of sectors

David Harbage — Thu, 09 Aug 2012 23:00:00 GMT

High levels of macro-economic noise, confusion surrounding the financial system, and unexpected ‘banana skins’ amongst a plethora of trading announcements, suggest investors need to be increasingly selective at both the business sector and individual stock selection level.

The Power of the Dividend

David Harbage — Thu, 02 Aug 2012 23:00:00 GMT

We are in the midst of the reporting season, with most listed companies having now provided an update of trading in the first half of 2012 and an indication of their prospects for the second half of the year. A standout feature, at least for this particular observer, has been the return of cash to investors via regular dividends and other means.

Defensive business industries - do they still appeal?

David Harbage — Thu, 26 Jul 2012 23:00:00 GMT

Against a backdrop of a fearful or lethargic market overshadowed by an apparent deepening of economic woes, surrounding the Euro zone in particular, we are pressing on in our promise to provide a view on the different business sectors within the UK equity market.

Tips for Traders

David Harbage — Mon, 23 Jul 2012 23:00:00 GMT

While most that has been written in the past twelve blogs surround sound long term financial strategy, there is undoubtedly scope for more nimble active investors to add value to a long term portfolio by making astute trades around the edges of the core investment plan.

UK Equity Market Commentary

David Harbage — Thu, 19 Jul 2012 23:00:00 GMT

While there has been no shortage of individual company specific controversies swirling around the market, and new survey data surrounding the macro-economic landscape has reinforced a consensual view that the world is slowing, it is perhaps surprising that domestic equity investors have seemingly ‘sat on their hands’ over the past couple of weeks.

From Managed to D-I-Y

David Harbage — Tue, 17 Jul 2012 23:00:00 GMT

In this article, the penultimate one of our series considering the prime types of asset available to long term savers, we turn our attention towards the potential help and advice available from professional financial advisors and portfolio managers, but particularly focus on – and suggest a few trading ideas for - the ‘Do-it-Yourself’ investor.

Telford - home sweet home?

David Harbage — Thu, 12 Jul 2012 23:00:00 GMT

Following on from earlier company specific articles on smaller or medium sized stock exchange listed businesses..

Summarising the prime Asset Classes

David Harbage — Mon, 09 Jul 2012 23:00:00 GMT

As we near the end of this series of blogs, reviewing the long term investment opportunity for retirement provision or other long term savings, the writer thought it would be useful to summarise – in tabular and aide memoire format - some of the asset classes we have examined and potential investment vehicles considered.

Housebuilders

David Harbage — Thu, 05 Jul 2012 23:00:00 GMT

An easing in tension surrounding problems within the Euro zone, allied to mixed economic reports in China, has resulted in a pick-up in appetite for risk assets over the past ten days.

10. Structured Products & Hedge Funds

David Harbage — Wed, 04 Jul 2012 23:00:00 GMT

Having looked at collective investment schemes last week.

9. Equity vehicles

David Harbage — Sat, 30 Jun 2012 23:00:00 GMT

Over the course of the past two months...

Retailers and Banks

David Harbage — Thu, 21 Jun 2012 23:00:00 GMT

Rather like our supposed summer weather…

8. Equity diversification

David Harbage — Mon, 18 Jun 2012 23:00:00 GMT

In the previous blog we looked at how the worth of profits can be assessed, as a means of placing a value on listed company shares.

UK Equity Market Commentary

David Harbage — Thu, 14 Jun 2012 23:00:00 GMT

The old stock market adage, advocating “Sell in May, and stay away, until St Ledger day”, appears to strike a chord with current investor sentiment.

7. Valuing equity investment

David Harbage — Mon, 11 Jun 2012 23:00:00 GMT

Last week’s blog introduced the concept of taking a stake in leading businesses..

Medusa Mining - A golden opportunity?

David Harbage — Thu, 07 Jun 2012 23:00:00 GMT

Following on from our review of Commodities...

6. Equity Investment

David Harbage — Tue, 05 Jun 2012 23:00:00 GMT

We are half way through our review of the prime types of asset that private individuals...

Mining

David Harbage — Thu, 31 May 2012 23:00:00 GMT

The mining sector.....

5. Commodities

David Harbage — Mon, 28 May 2012 23:00:00 GMT

After looking at the merits and shortcomings of cash, bonds and property investment, we continue our look at the various asset types available for long term savers by turning our attention to another physical asset: commodities.

Kentz: A 'mini' Petrofac?

David Harbage — Thu, 24 May 2012 23:00:00 GMT

Following on from our review of the Oil & Gas sector on 11 May...

4. Property

David Harbage — Mon, 21 May 2012 23:00:00 GMT

Continuing our look at the opportunities and risks surrounding long term savings we turn our attention to physical assets..

Utilities and Support Services

David Harbage — Thu, 17 May 2012 23:00:00 GMT

That was the week that was... There are two prime ways of making an assessment about markets: a top downmacro-economic and global perspective or a bottom up investigation of micro data and local news. There has been plenty of the former - by reference to political activity in Europe, in particular - dominating the media headlines. Suffice it to say, the slow progress of any resolution of Greece's political and financial problems is likely to cast a pall over markets and constrain short term enthusiasm. However, this week's commentary is going to take a bottom-up perspective on five big UK listed businesses, from two leading sectors, mindful that often positive news on the health of companies is buried beneath the big macro (of anticipated or actual) negatives. In a future article we will take a look at some interesting smaller companies, and how their size can be an advantage over big business, but today we will be looking at firms worth at least 3bn in equity market capitalisation terms. Certainly there would appear to be some truth in the suggestion that the biggest and strongest businesses survive, and ultimately thrive, unfortunately often at the expense of the smaller 'Momma & Papa' concerns. Trading results or management statements from a number of leading businesses caught the writer's eye this week. Utility giants National Grid and Scottish & Southern Energy delivered reassuring updates, in particular by reference to dividend pay-outs which met expectations. These firms are particularly favoured by private individuals, and other investors, seeking inflation-beating income from relatively reliable (by reference to economically sensitive) sources. Prima facie, 2011/12 attractive dividend payouts - equating to a 5.5% yield on NG and 6.0% on SSE - appear comfortably covered by current year profits but, looking forward, the industry regulator could impose greater capital expenditure requirements and alter the rate of returns these companies are allowed to earn, which in turn could jeopardise their ability to return cash to shareholders. Populist, if not political (to boost public revenue), pressure to claw back some of the profits made by the utilities - who are often perceived as benefitting from high electricity & gas prices - via an exceptional windfall tax, can also not be ruled out. Having flagged those risks, these impressive cash generators probably merit a place in cautious investors' portfolios based on their defensive merits and potential to add shareholder value via corporate action. Against the backdrop of very low short & longer term interest rates, both NG and SSE have performed well over the past two years. When interest rates rise, as they inevitably must over the longer term, the relative attraction of the current dividend may abate. Investors, as will the industry regulator, should also be mindful of future trends in inflation in terms of assessing the extent to which these businesses are allowed to earn a real return - and with it the magnitude of dividends, going forward. Another segment of the market to announce pleasing trading this week - albeit from a variety of very different firms - was a sector perhaps best described as 'Support Services'. Babcock International, which proclaims itself to be the UK's leading engineering support service group, reported full year results for the year to end March 2012 which comfortably exceeded the consensus of City analysts' earnings forecasts, driven by organic profit growth of 15%. A 35% increase in the bid pipeline to 9.5bn (order book 13bn), evidences the board's belief that there is real opportunity in outsourcing. The UK government - like many others is seeking to reduce immediate costs, by using the private sector to carry out functions previously carried out by its public bodies. For example, Babcock have benefitted by picking up defence work at Devonport dockyards, and another company announcing an encouraging update this week G4S - best known for Securicor and its London Olympic Games contract - has opened another prison in Wolverhampton. Austerity-driven measures to privatise guarding and security offers lucrative long term contracts for G4S, which is one of the world's biggest employers (via some 657,000 staff). G4S' management statement highlighted strong organic growth in the first quarter of this year and, following its ill-advised plans to buy the Danish group ISS for 5.2bn last year, investors warmed to the prospect of a return to its policy of procuring small, but frequent, typically in emerging economies, bolt-on or in-fill acquisitions to boost growth. Crime is, unfortunately, a growth industry around the world; G4S is likely to continue to be a beneficiary of demand for safeguarding services. In the current economic downturn which is impacting the developed world, it is not just governments that are seeking to cut expenditure. As seen previously at this point in the cycle, many big companies are endeavouring to take cost off their balance sheet by outsourcing services to external providers. Another support service company to advise its investors on recent trading, this week, was the global catering business Compass. Trading in the half year to 31 March matched best forecasts, and featured 10% profit progression and an 11% hike in the interim dividend. A breakdown of revenue growth, by geography, delivers to intuitive expectation: emerging economies +17.4%, North America +10.1% offsetting relatively pedestrian +3.3% in Europe & Japan. As Compass has grown its customer base, the group has shared some of its economies of scale (think bulk-buy of food stuffs) with its customers - in turn promoting a virtuous circle of winning more contracts, as companies or public institutions are forced by budgetary requirements to disband high overhead catering establishments. Investors have to be mindful of the price which they pay for these businesses: after performing well over the past three years, each appears fairly if not fully valued - with Babcock International set to join the FTSE100 index, if its stock's relative progress is maintained. While outsourcing appears set to continue apace for the next three years, no trend continues indefinitely and corporate cycles could yet see firms bring services - such as canteen catering - back in-house, perhaps prompted by a pick-up in confidence, prosperity or driven by contractors' overpricing of the service. While we are now moving into the quiet season until results for the quarter or half year to 30 June 2012 are announced, listed companies are becoming increasingly cute at managing expectations, by providing updates to the Stock Exchange towards the end of the trading period and guidance to leading institutional share holders via face to face meetings (typically facilitated by their own broker). However there are always exceptions, such as the oil services group Lamprell, whose shares fell 56% on Wednesday on advising that profits would be significantly lower in the current year. Best known for building oil rigs, this FTSE250 mid cap firm provided a positive outlook statement, when announcing full year trading results, seven weeks ago. A loss in the first half of 2012, and probable profits for the full year of just one third of that previously anticipated, is likely to result from underutilised resources and contract slippages following supply line difficulties. That two directors sold 1.7m worth of stock two weeks previously will annoy investors, as would the missed opportunity to provide an update when Lamprell reported a US$227m contract win on the 1 May. Such poor communication is not easily forgiven by fund managers; a recovery in investor sentiment and support for the share price is likely to be slow. In the absence of any major company-specific trading news or other developments, next week this blog intends to take a look at another natural resource industry - having looked at the oil & gas sectors in our previous commentary. The mining sector began the year brightly, rising almost 20% in January 2012 (by reference to the UK listed stocks), but has fallen away sharply since on fears of a slowdown in the global economy and China in particular. Perhaps the area of the market that courts most controversy, speculation and polarised views not just over the past couple of years, but for as long as the write can remember investors cannot afford to overlook the mining sector, either as a focus for global cyclical momentum, new entrants to the London stock market or for M&A prospects.

3. Long-term savings - Bonds (Part 2)

David Harbage — Mon, 14 May 2012 23:00:00 GMT

Essentially, when interest rates eventually rise, the fixed coupon income of gilts will appear relatively less attractive and the capital values of such bonds (especially those not protected by imminent redemption) must inevitably fall as their yields reflect a market offering higher rates.

UK Equity Market Commentary

David Harbage — Thu, 10 May 2012 23:00:00 GMT

The week that was...

2. Long-term savings - Bonds (Part 1)

David Harbage — Mon, 07 May 2012 23:00:00 GMT

This is the second in a series of articles assessing the merits and shortcomings of the prime asset types that private individuals will consider when thinking about their pension, or other long-term investment, planning.

UK Equity Market Commentary

David Harbage — Thu, 03 May 2012 23:00:00 GMT

This is the first in a series of weekly briefing; call it a blog if you wish, on the domestic equity market.

1. Long-term savings - Cash

David Harbage — Tue, 01 May 2012 23:00:00 GMT

This is the first in a series of 12 articles that have been written to help the reader make sensible plans about their finances.