Why 2013 might be unlucky for some!

Why the number 13 (2013) might be unlucky, not just for some, but for all of us.  And how to prepare for the worst.

Despite all the good news pre US election, regarding job numbers and improving manufacturing numbers from China, I am wholly unconvinced that the crisis has come anywhere nearing to finishing yet.   My problem is that since the 2008 crisis I only ever see potential problems in the world.  I feel like the little boy out of The Sixth Sense who says  "I see dead people everywhere". But the reason is because there ARE potential problems everywhere.

The recent rallies in stock markets have been stoked by excess liquidity and have not really come from decisions taken by Governments to rectify the current indebtedness of the Western world.  From that point of view alone there is little reason to be hopeful about 2013 from a market perspective. 

China's economy is slowing down.  It's economy has slowed from 10% growth to 7% growth in the last 2 years and no matter how you look at it they are heading for testing times, economically and socially.  The drive to get the Chinese consumer to consume more is going to take decades, not just a couple of years. 

Europe still leaps from crisis to crisis, although we have not seen much volatility here for the last 6 months.  Could this be a consolidation period? Possibly.  But none of the fundamental issues that underpin this crisis have been resolved or are anywhere near being resolved for that matter.   There is a lot of talk about growth, but I have never seen as many shops closing down and vacant properties in the years that I have been in Italy.

What could 2013 look like? 

My personal view is that 2013 could be another rocky year in the markets.  Certainly, I think it is fair to say that the next crisis will not come from the same place as the last i.e Europe.  My binoculars are pointed East this time.  A hard landing (as it is being termed) in China might just tip the balance in the markets.  It could come from Japan or some where we least expect it. 

Of course, every big moment in the markets creates opportunities for those people who have prepared for such an eventuality.  Holding gold and cash in your portfolio might prove to be a winner in 2013.  

And there is also the chance that I could be wrong on all counts.  

This is the great thing about financial markets.  They are fickle.  They move on fear and greed.  Any tipping point, positive or negative, is impossible to know and almost as impossible to react to.  They come so quickly that there is little point trying to time your way in and out. 

To be successful in these investing times is to be prepared.  Forget the idea that you can trade the markets and make money.  The professionals are having a hard enough time doing it and the computers work faster than you can get your hand over the computer mouse. 

The real success comes from adopting the tried and tested methods.  Buy good quality companies at knock down prices and collect the dividends, diversify your holdings, rebalance your portfolio once a year and wait.

Why I am positive about the future!

Despite all this doom and gloom I am really quite positive about the future.  I see that the internal pressures in Emerging markets for higher wages, fair treatment for workers and pressure to develop social safety nets, will rebalance the world economy.    It will be mean spending more in the East whilst we pay off our debts in the West.  It will bring jobs back to the USA and Europe, we become more competitive again, wages will rise, unemployment will fall and the cycle of growth and spend will return.  Markets will increase in the medium term and there are plenty of profitable places to invest in the meantime. 

I think that I, personally, am about to face the 1970's of my generation.  Social and economic discontent and high inflation.  But just as my parents and many like them survived their own crisis years, we will all survive this one and come out stronger.  My son will likely have his own 1970's moment (although he will call it his 2012/13 moment) in about 30 years, just when I am due to retire.  

Do I worry?  Well yes actually I do.  I am a born worrier, but I am told that is what keeps me going.  The increased amount of wrinkles and rapid loss of hair in recent years are testament to this.   

But I am positive about the future, despite what it might throw at me/us in the meantime.  

If you have a portfolio or savings that need reviewing then feel free to contact me without obligation on 3336492356 or gareth.horsfall@spectrum-ifa.com, to establish if I can help.