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Sterling: Time to leave a sinking ship?
Buyhighselllow
Posted: 08 January 2013 17:28:26(UTC)
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Does anyone else share my pessimism about the dire state of the British economy and sterling?

I can't see past the spiralling deficit, gaping balance of trade gap, dwindling natural resources (eg North Sea oil etc) and bouts of money printing, which, despite the significant devaulation of sterling has yielded no real improvement in competitiveness.

The looming credit downgrade, which seems to be on the cards, appears well over due.

Our politicians are hell-bent on driving us over the edge of a cliff rather than take the steps needed to address the fundamental problems with the economy.

Is now the time to ditch the pound until things pick up? If so, can anyone recommend effective ways of profiting from sterling’s fall? Will funds invested in emerging markets shield me from further GBP devaluation?

Thanks
TJLamb
Posted: 09 January 2013 11:58:43(UTC)
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Things do seem desperate, prices just seem to keep rising and one wonders where it will all end.
Are we any worse off than any other country though, or at least any comparable country?
But, at least it is possible to make money on the markets; last year was alright and here's hoping this year will be okay too.
Regards.
Jeremy Bosk
Posted: 10 January 2013 02:31:24(UTC)
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If you believe that Sterling will fall against a particular foreign currency, or against foreign currencies in general, you might want to look for an ETF that is long the foreign currency and short Sterling. For example: GBAU (short Sterling / long Australian Dollar) or GBCH (long the Swiss Franc and short Sterling). I personally know that these exist but have not read up on them so very much DYOR.

Alternatively you can buy shares in foreign companies on foreign exchanges through one of the many brokers that offer the facility. Selftrade is the one I use. If foreign exchanges and all the tax red tape are off putting then invest in the international section of the London Stock Exchange to buy, say, IBM or Novartis. Or buy British based exporters. Most annual reports indicate the percentage of overseas sales. Alternatively you can invest in foreign domiciled companies that are quoted in London either on the main market or on AIM.

You can find out about the last - which is probably the easiest route - here:
International Companies on the London Stock Exchange

The LSE site has a great deal more interesting information such as Landmark which lists UK companies by region / country. You can look up local companies of which you might have personal knowledge.

On the Sterling issue, I am agnostic. Most governments are run by criminal lunatics and moral bankrupts. So I just try to avoid investing in areas most vulnerable to political sabotage. I have a personal list of countries so bad (morality or economics) that I will not invest in them. In the long run I think that those two factors become one and the same.

Being British, I still invest here despite the decades long degeneracy of our politicians and electorate. I just avoid construction and industries where the government (national or local) sets the prices.
13 users thanked Jeremy Bosk for this post.
Buyhighselllow on 10/01/2013(UTC), Guest on 10/01/2013(UTC), Guest on 10/01/2013(UTC), Stephen Garsed on 10/01/2013(UTC), Cynic too on 10/01/2013(UTC), Guest on 10/01/2013(UTC), snoekie on 11/01/2013(UTC), J Rue on 11/01/2013(UTC), D B on 11/01/2013(UTC), Guest on 11/01/2013(UTC), banjofred on 12/01/2013(UTC), Richard Howe on 14/01/2013(UTC), Campbell on 14/01/2013(UTC)
Soozie Campbell
Posted: 10 January 2013 15:27:09(UTC)
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According to Caxton FX the pound will start to pick up again toward the end of 2013. They say it will get close to 1.3 against the euro. Follow them on Twitter @CaxtonFX.
Gristybeasty
Posted: 10 January 2013 15:38:52(UTC)
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All you doom and gloom merchants. Talk sterling down talk the economy down and you will get just that.
Be positive, be patient, put a brake on this get rich fast stuff and bite fingernails to the bone when bank account stagnates.
Remember the grass or always greener on the other side...or is it?

Have faith in your country, your currency and your economy. It will improve, believe me. Just be patient!
3 users thanked Gristybeasty for this post.
Clive B on 11/01/2013(UTC), Tom Bourne on 13/01/2013(UTC), jc on 13/01/2013(UTC)
Marcus West
Posted: 10 January 2013 15:43:37(UTC)
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Faith?

UK's debt to GDP is about 400% isn't it? SO for every £1 we borrow we create 25p of growth..great.

Faith?? My people die for lack of knowledge might be more appropriate here.


I was trading on the TSX within half an hour on TD Direct Investing (Price Waterhouse I think).
They also offer HK and Singapore exchanges, amongst others.

Trust Alliance also looks quite global in scope. Best of luck..or should I say....ah, never mind.
JEL G
Posted: 10 January 2013 19:03:59(UTC)
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What bothers me most is that the Labour Party will walk into power in 2015 and that under those tossers will be absolutely disastrous.
But where else can one go. Glad I'm in my late sixties and comfortably off.
2 users thanked JEL G for this post.
Buyhighselllow on 10/01/2013(UTC), Richard Howe on 14/01/2013(UTC)
Bob saxton
Posted: 10 January 2013 23:00:32(UTC)
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Is the ship sinking? Yes. Why? Because we have a poorly educated population.
This has led to poorly educated politicians who cannot make good decisions.
They try to perform in an old Parliament where it is totally inadequate for a modern country. In the eighteenth century everyone knew about transport, energy, defence/attack, agriculture and education because there was little new, now only the specialist can be competant in any one of these fields. It used to be said that,"In the land of the blind the one eyed man is king". In parliament the one eyed man is not believed and is shouted down by the intelectually blind.
We now have a feedback loop where ill educated teachers produce ill educated pupils who become ill educated teachers.
This has led to a prejudice against being clever and hard working. Elitism is pejorativeThis does not apply in some other countries as can be seen in some of our immigrate communities and our European rivals. A look at the origines of the cars on the street, kitchen and other manufactured goods in the shops and machines in our factories will clearly indicate which countries have a clever and industrious workforce and where to invest your money.
Bob the electrician

1 user thanked Bob saxton for this post.
Guest on 11/01/2013(UTC)
Buyhighselllow
Posted: 10 January 2013 23:41:11(UTC)
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Bob saxton;17488 wrote:
Is the ship sinking? Yes. Why? Because we have a poorly educated population...
We now have a feedback loop where ill educated teachers produce ill educated pupils who become ill educated teachers...
This has led to a prejudice against being clever and hard working. Elitism is pejorativeThis does not apply in some other countries as can be seen in some of our immigrate communities and our European rivals.
Bob the electrician


Bob, you're spot on.

And the comment about 'doom mongers' and a lack of 'patriotism' because we’re talking down the currency illustrates the point.

Why is it patriotic to cheer as our despicable, self-serving, criminal, dullard, ignorant politicians steer this economy on to the rocks just to buy themselves another term in power.

The patriotic thing to do is call for an end of the lunacy... And if your voice will not be listened to, take your money elsewhere. It’s what I’m trying to do.

Interestingly, what’s bad for the economy and the country can inversely be good for the stock market.

Quantitative Easing has robbed savers of their hard earned reserves and pushed more people into riskier equities etc. So, I’ll be leaving some in the FTSE for the time being.
Jeremy Bosk
Posted: 11 January 2013 04:36:27(UTC)
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Actually, talking down the currency might be just what the doctor ordered.

It makes our exports more competitive and imports more expensive. So those companies that export products which contain few imported raw materials stand to benefit. Services of all kinds including intellectual property, legal, culture and entertainment, inbound tourism, food and drink (Scotch for example), education... Also companies that produce goods that substitute for imports e.g. local power generation not using imported fossil fuels, home grown food...

Those worried by growing government debt might like to look at some comparisons available here:
International Debt Comparisons

It appears that government debt is rising because of AUSTERITY. Austerity cuts economic output and growth. Which cuts tax receipts and increases the cost of social security. So, if you want to stop debt rising to become an even greater millstone around our necks...
4 users thanked Jeremy Bosk for this post.
Buyhighselllow on 11/01/2013(UTC), mikest on 11/01/2013(UTC), Guest on 11/01/2013(UTC), David J Robertson on 14/01/2013(UTC)
Buyhighselllow
Posted: 11 January 2013 14:57:04(UTC)
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Jeremy Bosk;17493 wrote:

So those companies that export products which contain few imported raw materials stand to benefit. Services of all kinds including intellectual property, legal, culture and entertainment, inbound tourism, food and drink (Scotch for example), education... Also companies that produce goods that substitute for imports e.g. local power generation not using imported fossil fuels, home grown food...


This might be asking a lot, but can anyone help with a list of half a dozen good British based exporting companies (FTSE listed), which are underpriced, preferably dividend paying, which is set to exploit the falling currency?

I was looking at Barclays. Have I missed the boat?
J Thomas
Posted: 11 January 2013 22:29:33(UTC)
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According to the IMF UK GDP will exceed that of Germany in 2013 and Sterling will increase from 81p to 75p against one Euro.
The US Dollar is expected to increase slightly against Sterling this year partly due to the expected large fall in the Yen as US GDP improves.
I am quite optimistic about Sterling, my only fear is that Labour will reap the benefit of five years of austerity and painful restructuring.
Rory
Posted: 12 January 2013 00:45:57(UTC)
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There are a number of positive features of sterling that indicate that its doomsayers are premature;

1. The UK is a geopolitical backwater with a subdued populace, few potential external threats and a stable domestic polity.
2. Climatic and seismological threats are rare and comparatively mild.
3. Improved recovery of offhore oil, well-based and shale gas indicates long term energy security. However, a major oil strike in the Falkland Islands could prove destabilising with a return to a skyrocketing pound and 'Dutch Disease' problems that lay behind many of Britain's economic woes of the late 1970s and early 1980s.
4. In this context, the high level of indebtedness may be something of a blessing in disguise, acting as a brake on the kind of euphoria that has sent the Swiss Franc soaring, but only as long as this debt is long-dated and denominated in domestically-held sterling. One would not wish to follow the Americans into the fiscal bedlam where half of their mostly short- and medium-term debt is held by non-residents.
5. The pound is the least ugly partner on the dance floor. Competitive devaluation in the Eurozone and the USA might change this happy condition, but probably not for some years.
2 users thanked Rory for this post.
Clive B on 12/01/2013(UTC), Buyhighselllow on 12/01/2013(UTC)
banjofred
Posted: 12 January 2013 07:40:45(UTC)
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What options are you considering

The Yen? - ha
The Dollar printing 40 billion a month - a very risky option
The Euro - donald ducked

Frankly I like I pictures of the Queen,and I am glad we have them.

the one true currency which keeps its value and has been universally accepted for thousands of years, and will be accepted after Armegeddon
is


G O L D

buy some


I did
Jeremy Bosk
Posted: 12 January 2013 10:29:18(UTC)
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Buyhighsellyellow

Meggitt

Stanley Gibbons, Noble Investments or Avarae Global Coins

IQE (no div but very fast growth)

Indigovision

Vianet

XP Power

Greencore

As ever, DYOR.

PS I hold Noble Investments. I made a lot of money in XP Power a couple of years ago and timed my exit right, it is on my short list again.
1 user thanked Jeremy Bosk for this post.
Buyhighselllow on 12/01/2013(UTC)
Jeremy Bosk
Posted: 12 January 2013 11:13:08(UTC)
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Buyhighselllow

Sorry about the name earlier, my eyes are tired.

It also occurs to me that when you say in FTSE, you mean FTSE 100 and definitely not AIM. Sorry for the irrelevancies from your point of view. I have not held a FTSE 100 share in some years, believing that there is better value elsewhere and not being a higher rate tax payer.
1 user thanked Jeremy Bosk for this post.
Buyhighselllow on 12/01/2013(UTC)
Graham D-C
Posted: 13 January 2013 09:40:12(UTC)
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Unless matched by quality and efficiencies in production costs, a strong £ is bad for UK exports, it sucks in imports, reduces tourism and the value of dividends paid by companies based abroad, In order to achieve a balanced budget we need to stop trying to kid ourselves that we are a world power and reduce the defence budget accordingly. severely cut imigration and thereby the huge financial and social costs of unemployment and the burdens on the NHS, Social Services,prisons and education. Renegotiate with the EU or leave it.
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Bob Scott on 13/01/2013(UTC)
Jeremy Bosk
Posted: 13 January 2013 13:35:35(UTC)
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Graham D-C

I agree with you up to the words "world power". I sympathise with the idea that the armed forces are largely unneeded. But: The Falklands? But: the defence industry as an employer? Would the USA buy our weapons and such if we did not provide Janissaries to fight America's wars? Defence is one of the largest sectors of UK manufacturing.

Large sectors of our economy depend on immigrants whether from Poland, the sub continent, West Indies or Africa. Visit an NHS hospital anywhere in the country but especially in London and you will see. Visit a university and check the names of the lecturers as well as the students. Visit an old folks home or a farm in Lincolnshire at harvest time. The idea that stopping immigration or expelling immigrants (legal or otherwise) would magically make local unemployed people able and willing to take these jobs is laughable. A high proportion of the long term unemployed are unemployable whether through illiteracy, innumeracy, drink, drugs or criminal records. Note very definitely not all. Some cannot move to where the work is for valid reasons or are simply refused jobs for invalid reasons such as age.

Most immigrants are young and net tax payers. Those who have children and stay will be pushing the rest of us around in our wheelchairs and wiping our drool. If we educate the children they will look on this country as their own and very likely be the doctors, nurses and teachers of the future.

Do you have figures for the percentage of immigrants as opposed to native born people in prison?

Have you been reading the articles in the quality media lately by employers on the subject of EU membership? Almost all say we would be idiots to leave. Most supporters of leaving seem to be very extreme right wing rabble rousers.

huudi
Posted: 13 January 2013 16:50:32(UTC)
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We are financially and morally bankrupt. The pound has lost value for more years than I can remember. I suggest not only investing in another currency but moving your cash to a financially stable country if you can find one.
The time will come when we will be prevented from doing so and though you may be comfortable now, raging inflation will finish that.
Had the system been allowed to crash then by now we should be in recovery, but by patching up the system the eventual depression will be much worse. Come the next election the dogs decide the menu and any money left in the UK will pay the bill.
Rightcharlie1
Posted: 14 January 2013 06:28:39(UTC)
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Because of QE the £ has already devalued against other currencies that do not have this problem. The £ on an international basis is -66% AUD, -30% THB, -33% JPY since 2009. This is the only reason we are seeing gains in London property, if you are paid in AUD London property is still 50% of the cost it was in 2009!!!

And even with countires who face the same problems, US and Euro the £ is down 25% and 15% respectively. Our polititains have now raided £35b of printed money and they fail to address reallity. And when reallity does sink in, we will have worse to come!!
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