Investment Newsletter - December 2014

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Investment Newsletter December 2014

Santa Rally? Mike Deverell Investment Manager

We are well into December now but the usual Santa Rally seems to have gone into reverse so far this year! Rudolf and the other Reindeers appear to have detached themselves from Santa’s sleigh and gravity is taking hold… Having ended November at 6,722, the FTSE 100 has dropped back to 6,200 as I write (the morning of 16 December). As a result we are currently conducting one of our “volatility trades” – where we buy on market dips and sell after a rise. We are using the proceeds of a previous volatility trade, where we bought a FTSE tracker at around 6,240 in October and then sold again at around 6,500. The December slide contrasts (at least so far) with each of the past 11 years where the FTSE has ended December in positive territory.

This has plenty of benefits for consumers and many companies, but also some drawbacks. The low price has pushed oil dependent Venezuela to the brink of default and is also causing massive issues in Russia. The rouble has dropped 39% against the dollar since the end of June, making a lot of Russians much poorer. There are even some concerns about Russian debt default, although this remains a distant prospect for now. For more details on what has been happening with oil, you can read my latest article for Citywire by clicking this link if you are reading electronically :

http://citywire.co.uk/money/what-does-the-fallingoil-price-mean-for-investors/a788325

The recent falls are partly a result of the falls in oil price. Equilibrium Asset Management LLP (a limited liability partnership) is authorised and regulated by the Financial Conduct Authority. Equilibrium Asset Management is entered on the Financial Services Register under reference 452261. The FCA regulates advice which we provide on investment and insurance business; however it does not regulate advice which we provide purely in respect of taxation matters. Copyright Equilibrium Asset Management LLP. Not to be reproduced without permission.


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