The nation of Greece said sorry to the European Union with a
present of an enormous wooden horse.

Left outside the European Central Bank in the dead of night,
the horse has now been moved into the ECB’s central lobby where it is proudly
on display.

A gift tag attached to the horse, which is surprisingly
light for its size and has small holes along the length of its body, suggested
that it should be placed in the bank’s vaults overnight to avoid it being
targeted by thieves.

Mario Draghi, President of the ECB, said: “How nice of the
Greeks to acknowledge the trouble we’ve been put to on their behalf with this
wonderful horse, handmade and so large it could hold a dozen double-decker
buses.

“The card with it, which had a teddy bear dressed as a hobo
on the front, explained that Greece made us this because they don’t have enough
money for a present, which brought a tear to my eye.

“Nonetheless, unless they can somehow find €200 billion
overnight then austerity measures must continue.”

Oddly, Greek representatives in Brussels have hinted that
they may soon be in a position to settle their debts and have puzzled the
French and German banks that hold their loans by asking if there is any
discount for cash.

The government of Spain has reacted angrily to the gift,
accusing the Greeks of trying to bribe the ECB and redoubling their own efforts
to weave a gigantic sombrero-wearing straw donkey.

Well, at the very least, if you have £100,000 or more, you could make your deposit money work harder by looking at the Jonathan Fry Dynamic Cash Management service read more here

Meanwhile, equity funds are yielding at least 4% and corporate bonds the same and there is the prospect of capital growth over time. Give us a call.

See my comments on this and the wider perspective of fund managers’ performance

Woodford should never have ‘lost’ his flawless record. If a good fund manager sticks with his process and philosophy that is all that an adviser or investor needs to know. All fund managers will make poor calls and they will admit it – it goes with the job – but providing that over a reasonable time period and market cycle they produce the returns, the rest is froth and hype. How many times have we read that ‘Woodford loses the plot’ or ‘Dobell misses a trick’ or ‘Thomas fails to spot..’. It’s just a headline without thought, examination or substance.

•           If it sounds too good to be true, it probably is.

The snake oil salesmen have always been there and always will be. If you are offered a high return it’s because you are taking a high risk. That risk might be that the scheme is fraudulent and you are being tempted by high returns, or it might simply be that the
market is in a frenzy and driving up prices. Remember the ‘tech bubble’ of the
late 90′s?

•           no investor ever lay awake at night worrying that their investments were going up, so minimise your losses and the gains will take care of themselves.

If you make a paper loss on your investment of 50%, what return do you require just to get you back to ‘break even’? The answer is 100% which is pretty daunting. But if your average loss over time is more in the 10%-15% region, the mountain is easier to climb.
Everyone talks up their success stories….

•           investing just to achieve a ‘high return’ is muddled thinking. You should invest to obtain the return required to achieve the objectives set within the timescale agreed and your tolerance of risk.

Suppose the average net return you require over a period is say 6% p.a to achieve your stated aim. Historically this is a ‘realistic’ and achievable return. So why would you choose to achieve the potential of a much higher return, with the attendant risk to capital, when there is no need to do so? (see minimising losses).

•           tax and financial planning drives the investment strategy – not the other way around.

The two are like a car. The vehicle (financial planning) takes you where you want to go, the engine (investment) is what powers it. You can drive north as fast as you like to Edinburgh, but if you’re supposed to be going to London your journey is in vain, no matter how quickly you get there. Get your tax and financial plans laid down and agreed, then choose the investment strategy.

•           frequent trading is costly, counter-productive and kills returns. Short-termism in pursuit of a quick buck is the strategy of your mate down the pub.

Trading costs money, not just in dealing costs but lost opportunity. The right time to come out of an investment is when? The right time to buy an investment is when? Get your asset allocation right, set your course and give the tiller a nudge from time to time, but
never, ever, believe that you can call the market.

• time in the market is what matters, not timing the market.

No-one can time the market: no-one. Not your mate down the pub, not that clever guy on the telly, not your brother-in-law, not the most successful investor of all time. So don’t try. Commit your capital to the markets, don’t lose your nerve and the rewards will
come. If you don’t take this on board you will end up buying high and selling
low for the rest of your life.

•           patience and a well-balanced portfolio of mixed assets will produce the returns.

It is correct asset allocation that produces the returns: (don’t argue, it’s a proven fact). Always remember that there is no ‘equals’ sign between the words ‘stockbroking’ and ‘investment’. A good portfolio should contain elements of equity, property, bonds, commodities, cash and so on, which in combination will produce the returns and protect you from the shocks should one of them go into free-fall.

•           ‘This time is different’ are the four most costly words in investing history.

This time is never different. Political systems may change, technology moves on, social mores may be different from one generation to the next, but the causes of economic woes
remain the same – human folly. The picture might appear different but it tells
the same story, so never believe that the answers this time need to be
different to last time, because the underlying problems are the same as they
ever were.

•           no-one knows everything. An investor who has all the answers doesn’t even understand the questions.

No explanation required. Just remember it.

•           Don’t follow the crowd. If they’re all doing the same thing, how can you achieve a superior return?

If the crowd are all buying, the price goes up and when the crowd all sell, the price goes down. That’s not a basis for investing. What’s happening today makes the headlines, what will be happening two to three years from now is what is going to make you money.

This document represents a personal view and is intended merely as a guide for potential investors, not a guaranteed formula for making money. It does not constitute an offer, invitation or solicitation to deal in securities or any other investment medium. The value of your investments may go down as well as up and you may not get back the amount originally invested. All investments carry some degree of risk and potential investors are strongly advised to seek professional advice.

We now learn that the FSA did not take action against the ARM Life Settlement Fund (which was under scrutiny) in August 2010 because to have done so “could have led to a
run on the fund”. They went on to say that “we (the FSA) decided not to publish
the supervisory notice at the time because in (our) opinion it was likely to
have caused a run on the portfolio in the form of redemption requests”.

Given that that the supervisory notice which said that the firm presented ‘a risk to consumers by continuing to be permitted to conduct  a regulated activity in respect of new business relating to products linked in any way to investments linked to ARM’ was issued on 17^th August 2010 (but not published), can the FSA now explain why on November 28^th 2011, Margaret Cole issued a statement condemning all life insurance funds as ‘high risk’ ‘toxic’ and ‘Ponzi schemes’ (a term now quietly dropped by the FSA incidentally, because a Ponzi scheme by its nature is fraudulent and cannot be substantiated and Cole as a lawyer by training should have known better than to make such a claim), which resulted in
perfectly sound funds such as the EEA Life Settlement Fund having to suspend dealing due to “a run on the portfolio in the form of redemption requests” thus disadvantaging investors and causing a totally unjustifiable lack of market confidence which the FSA is supposed to prevent, was seen to be in investors best interests?