It's a Game of Two Halves

Anyone else stuggling with this market? Put your hands up.

 

Right, that's all of you then. Hands down.

 

To put it in football terms, the market's separated into two halves - one half is great (for now) and the other half is in the doo doo. The good half? Oil, oil services and commodities - these have still been going up in the main through the recent market turmoil. The bad? You know it - property, retail, banks and anything to do with building or construction.

 

The only way I found to make any money recently is to go long the good half and short the bad half. And - rather than shorting the FTSE 100 - I've preferred the FTSE 250 which is now crammed with companies on the slide. So I've (on paper anyway) made some good profits shorting things like Next, Rightmove, Travis Perkins and WPP.  And the oils have been going well especially Dana Petroleum and oils services companies like Hunting.  Where I lost money was holding onto one or two small caps for too long. For right now with private investor confidence low, the small caps are in big trouble.

 

Of course as ever with markets things can turn around and I have no doubt one day the two halves will switch and it'll be time to get back into banks and property and ditch the oil.   When will that be though? It doesn't look like anytime soon. Everything seems to rest on the price of oil.  I'm sure governments will be trying to think of ways to make this happen - because if they don't we're all in big trouble. Imagine oil at say $250 a barrel. Our lives will change dramatically. Forget cheap travel and food.

 

I was talking to someone the other day who thought it might go much higher than that within five years. If he's right things will change and the stockmarket will be radically different.

 

Ok, let's look on the bright side. Oil prices could be a bubble and this winter the price will fall, investors and companies will regain their confidence.

 

Investors buying on bad days and holding could be the winners. But it takes a lot of courage to buy when others are selling. I really wish I had some answers but sadly I am no soothsayer.

 

I'm off to the USA for some sunshine in The Hamptons. Always difficult to know what to do about a portfolio when you're on holiday. My preferred method is to take the laptop, hook up to wireless and keep in touch 2-3 times a day. Then I can get out of trouble if need be without actually "working" on holiday.

 

Good luck to you all in these very tough markets.