Pensions Advice, Retirement Planning - Investment Financial Adviser Dunfermline, Fife, Scotland UK

Posted by William on March 13th, 2008 in Investment Advice

After analysing the response of the stock market to the Chancellor of the Exchequer’s first budget yesterday - keeping a level head and steady financial nerve is at the very least wise advice indeed. Alistair Darling’s body language is leaking a message which is unsettling folks everywhere it appears.

After the budget fearful investors seem to be responding negatively to his assurances that the UK economy is still robust enough to weather the deepening credit storm racing at us from across the Atlantic. High spring tides have been pounding British homes with blistering storms in the last few days and March certainly has come in like a lion. Many feel the markets are reflecting similarly severe financial ‘weather warnings’ here in the UK for the rest of the year.

Put simply, investors are scared of what else is lurking at the bottom of the can of worms which Uncle Sam has opened vis-à-vis the US housing market and its profound effect on finance markets everywhere. In an age of instant global communication many don’t really trust the Treasury any more because they now have access 24/7 to real-time financial information across the pond for themselves. These days investors are sophisticated and intelligent enough to put two and two together and realise someone else somewhere is fudging the figures.

Fact is ” lifelong learning” as promoted by Tony Blair really has been taken to heart by a whole swathe of UK investors anxious never to be caught with their pants down in the financial markets again. And all I say to that is “Power to the people” and a hearty “Amen!” - education is always good. In finance it can mean the difference between a life of penury versus one of limitless bounty.

This is 2008, not 1998 and because of the Internet, good financial education regarding investing in the stock market has never been easier to obtain. Most British investors are absolutely determined never to be hoodwinked again or be caught unaware by potentially catastrophic financial debacles such as we saw with Northern Rock. Trouble is, as the old adage goes “… a little knowledge is (can also be) a dangerous thing” and nervous investors are proving more than a little trigger happy because it’s so easy now to switch investments at the click of a mouse, as we can see by what happened earlier today in the city.

When the FTSE 100 opened for trading this morning the index of leading shares plunged by 2% to 5668.70 after Alistair Darling had revised downwards his forecast for the British economy to 1.75% - 2.25% instead of 2% - 2.5% in his budget. Even that figure is too high suggest sceptical city economists who predict growth to be nearer 1.7% this year instead.

So with all these scathing attacks on our Chancellors predictions for the economy and our investments - what should a wise and cautious investor do? Well, remember why you invested in the first place and stick religiously to the fundamentals as I mentioned in earlier articles about this very subject here…

Investment Markets Laid Bear

and here…

What Should I Do With My Investments

The advice I gave then was never more true than it is now.

Revisiting it may help if you’re feeling a little ‘trigger happy’ yourself. Why ditch perfectly good investments with good long term potential simply because of the emotion driven behaviour of today’s ‘crowd’ - however well they feel they may have educated themselves.

Remember, it’s not just how well educated you are, in investing it’s also about how well you can handle your feelings and emotions when waves of panic and hysteria are hurled at you from all angles via the 24/7 nature of today’s inter-connected Global Media. Daniel Goleman was pretty much spot on with his ground breaking work “Emotional Intelligence - Why It Can Matter More Than IQ“ (1996) Bantam Books. ISBN 978-0553383713.

In fact, here’s a little final suggestion for you - why not go and pour yourself a stiff malt and read a copy of it? You’ll enjoy it and it’s sure to offset some of the doom and gloom washing around the shores of the UK just now. Who knows, you may also start making more money as a result too!