If you mentally update to the present date the dividend yield graph I posted earlier to reflect the more recent 5.25% yield (7.8 PE), then on the basis that we entered a Bear in 2000 we might be at or near the 'fair' Bear price level.
In simple terms Governments have or are taking bad debts off banks hands - without that action new comer banks could come in (debt free) and wipe the floor with the older banks that carried heavy debt liabilities.
Gov's borrow to cover the bad debts and will likely finance those borrowings via a combination of inflation (printing more money) and higher taxation.
So as companies make profits, instead of stock prices rising more likely interest rates will be raised, which lowers the price investors are prepared to pay for stocks - keeping average stock prices somewhat level. Bond yields will rise (bond prices decline).
Over time there will be over and under cooked periods, possibly with average stock yields hitting highs of 8% and/or bond coupons hitting 10%+, so likely they'll be some sizeable AIM buying (and selling) opportunities along the way.
Whilst the UK's PE of 7.8 currently reflects price declines, the US SP 500 PE (29) has risen in reflection of earnings declining faster than stock prices. This is perhaps suggestive that the US is in a better condition than the UK and that US expectations are more towards earnings declines being a temporary down blip whilst UK expectations are that earnings declines are down for a more extended period of time (UKP declining more than the USD).
The US has typically grown capital more and paid less dividends than the UK. That looks set to continue in the forward direction. Obama is a bit of a Tony Blair reflection and whilst we've had the bulk of politically leftward type social spend and are now starting to head back to the political right, the US is more geared towards a leftward shift.
The relatively lower UKP however will help towards a faster recovery for the UK than might otherwise have been the case.
From a UK investors perspective perhaps consider adding to international USD based holdings as a currency play.
A combination of ISF.L (FT100), IUKD.L (FT350 high yield) presently provides around a 6% income - with perhaps flat capital growth (but some AIM price volatility capture benefits), add DOW to that and you'll have around 5% total income (assuming three equal parts) and some growth/currency diversification added in. Individually AIM'ing the UK side to 50/50 stock cash settings should cover you sufficiently for the mid term. From a longer term perspective the additional buys that would appear likely should cost average you in in a manner that will serve you well over the longer term.
For existing AIM's that are light in cash, well we just bought in at relatively higher prices and should continue on as-is.
In simple terms Governments have or are taking bad debts off banks hands - without that action new comer banks could come in (debt free) and wipe the floor with the older banks that carried heavy debt liabilities.
Gov's borrow to cover the bad debts and will likely finance those borrowings via a combination of inflation (printing more money) and higher taxation.
So as companies make profits, instead of stock prices rising more likely interest rates will be raised, which lowers the price investors are prepared to pay for stocks - keeping average stock prices somewhat level. Bond yields will rise (bond prices decline).
Over time there will be over and under cooked periods, possibly with average stock yields hitting highs of 8% and/or bond coupons hitting 10%+, so likely they'll be some sizeable AIM buying (and selling) opportunities along the way.
Whilst the UK's PE of 7.8 currently reflects price declines, the US SP 500 PE (29) has risen in reflection of earnings declining faster than stock prices. This is perhaps suggestive that the US is in a better condition than the UK and that US expectations are more towards earnings declines being a temporary down blip whilst UK expectations are that earnings declines are down for a more extended period of time (UKP declining more than the USD).
The US has typically grown capital more and paid less dividends than the UK. That looks set to continue in the forward direction. Obama is a bit of a Tony Blair reflection and whilst we've had the bulk of politically leftward type social spend and are now starting to head back to the political right, the US is more geared towards a leftward shift.
The relatively lower UKP however will help towards a faster recovery for the UK than might otherwise have been the case.
From a UK investors perspective perhaps consider adding to international USD based holdings as a currency play.
A combination of ISF.L (FT100), IUKD.L (FT350 high yield) presently provides around a 6% income - with perhaps flat capital growth (but some AIM price volatility capture benefits), add DOW to that and you'll have around 5% total income (assuming three equal parts) and some growth/currency diversification added in. Individually AIM'ing the UK side to 50/50 stock cash settings should cover you sufficiently for the mid term. From a longer term perspective the additional buys that would appear likely should cost average you in in a manner that will serve you well over the longer term.
For existing AIM's that are light in cash, well we just bought in at relatively higher prices and should continue on as-is.
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