Felicitaciones a todos nuestros clientes españoles por la victoria del equipo de España en el mundial!

MARKET RALLY ENDS LONG DOWNTURN

Just as the more nervous investors were enquiring if they should encash all their holdings or convert everything into gold the Dow index produced its strongest gains in a year and the index shot above the 10,000 mark again. I wouldn't count on the rally being sustained but if there is a further downturn the trend could follow that of many previous years where markets fall from May but surge again later in the year. Impossible to be certain of course and there is still more bad economic news around than good but long term investors are long accustomed to this.

A word about gold.

No question it should be part of every respectable portfolio but as with any single asset it is not wise to be over-exposed to it. Some may recall when the price fell from around $800 to $300 an ounce in the early eighties. It then remained around that level for 25 years! Could this happen again? Unlikely, but too big a risk to invest excessively in gold. What could trigger a correction, if not a steep fall, would be a sharp rise in US interest rates. Gold will always have value but it pays no interest. Nice to look at a bar of gold on the shelf but it doesn't pay the rent! Then again, it's good to have some gold as a long term hedge against inflation, currency devaluation and political uncertainty. No need to buy it in its physical form; it is now safe and convenient to buy it through mutual funds that invest themselves in bullion or in the mining companies.

Best way to handle unstable markets?

It's a bit like flying a plane. The best way to get from A to B (B = your long term objectives) is to stick to your course, making just minor adjustments along the way to take advantage of prevailing winds and to avoid headwinds and turbulence. Reacting aggressively or panicking can bring the plane (or your investments) down. To be realistic, we should expect some more turbulence while the US and Europe unwind their massive debts. But in the meantime many companies are still making healthy profits and the developing world is ticking along very nicely. With strong growth predicted for emerging markets we should be allocating more in this direction. Some are talking about a China property bubble and there are certainly risks in that market. But keep in mind the words of Warren Buffett who said that the 19th century belonged to Britain, the 20th to America and the 21st would belong to China, so invest accordingly!

SYMPHONY GLOBAL ALTERNATIVE STRATEGIES

The fund has officially closed and is in the process of unwinding the assets that became illiquid as a result of the financial meltdown and credit crunch of 2008. Around 70% of the fund has been returned to cash. Skandia have indicated they will now accept sell orders for the fund so we intend to place such orders where we have delegated authority. We expect most of the cash to be released before year end when it can be reallocated. The Symphony fund was billed as a low risk fund that invested primarily into Momentum AllWeather, a hedge fund with an impeccable record of modest but steady returns and no annual losses - until the meltdown of 2008! Fortunately the losses were small compared to those of some hedge funds that were wiped out.

SKANDIA ONLINE

If you have a policy or policies with Skandia you can now sign up to their client online service. To register, log on to www.royalskandia.com and follow the instructions. You can still of course access the information through PPI's online service which is able to consolidate your holdings with those with other institutions.

OPPORTUNITIES 'OUTSIDE THE BOX'

While we tend to focus (rightly) on core investments such as stocks, bonds and cash there are many interesting investment opportunities in other areas. These should be of particular interest to investors who already have a solid base of core holdings and who can prudently expand their horizons.

One of these is a forestry investment in Thailand, specifically in highly valuable Agarwood. The standard investment period is seven years, the time it takes for a newly planted tree to reach maturity. For those who prefer a shorter time span there are secondary market opportunities from time to time such as at present, with individual lots of 100 trees upwards maturing in three and four years respectively. The offering company Touchwood projects net returns from 15% per annum upwards. Site visits can be arranged for those interested.

Another investment opportunity which has been with us for some time is REDEV, a company that invests in shopping plazas in Canada. This investment produces a regular income as well as the prospect of capital growth. Minimum investment CAD 25,000. Wholesale commercial and residential property company IP Global continues to offer attractive real estate investment opportunities worldwide. The most recent offering consists of tenanted retail units in the centre of Birmingham, England from GBP115,000.

A fourth case is litigation investment in the UK. This is an opportunity to share in some of the bounties arising from litigation where the costs of fighting cases deemed to have a high chance of success are shared by investors. The cases are accepted on a win-only fee basis but the company involved in the funding has a high record of success with most cases being settled out of court once the defending party is aware that it is up against a well-funded team of lawyers. The success rate is so high that an insurance company even covers the possibility of losing. At the moment this area of investing is open principally to institutional investors but a small retail market is developing. Participation should be possible from $25,000. ATTENTION ALL INDIAN CLIENTS! We are sponsoring a major event for the large Indian community in Jakarta at the Bellagio Complex Function Hall on Saturday, August 14 in commemoration of Indian Independence Day. There will be an evening of entertainment, music and of course fine Indian cuisine! The event will be well-advertised but please contact us if you want to be sure of receiving details.