| 2008 was the worst year in history for equity markets |
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So why are we so excited in January 2009?
We now enter a once-in-a-lifetime opportunity to buy funds and shares and other assets at prices that will probably never be repeated. Funds have fallen as much as 70% in 2008. This means they can now be bought at 30% of their previous highest value. So should you buy now, or wait? Of course the markets can fall again, but is it likely? Waiting is the opposite of what investors should be doing. Buy low and sell high is the mantra of all investors. If you wait until the markets return to ‘normal’, you will miss out on most of the benefits the markets have to offer. But – I hear you say – what if they don’t go up? And here is my answer. At the peak, a company’s shares were selling at up to 30 times the value of the dividend paid by the company from trading profits. This means that in the past, shares recouped their purchase price in 30 years. Today, shares can be bought at 3 times dividend, (Price/ Earnings (P/E) of 3, in many cases. So, today, you can buy shares and recoup your outlay over 3 years if you are fortunate. This means you can double your money in 3 years even if the capital value of the share does not increase. There has never in history been a better time to buy certain investments. Mutual Funds run by good investment companies spread the risk and diversify over hundreds of companies and industry sectors. Fortunes will be made in a few short years by those brave enough to invest today. For example, one equity fund managed by Habib Bank and investing in Pakistan gained 36.77% in the month of January 2009. Fortune favours the brave When a pipe bursts in your home and water floods across the floor and starts coming through the ceiling, leaking into the light fittings and blowing electrical circuits, and then the water starts to cover your furnishings and leaks into your book cases, you need a plumber. Typically in Dubai, we all learn through experience that some plumbers are professional and some are not. At Holborn Assets we have professional, knowledgeable, skilled, trained advisors who have passed tough British or Australian examinations to become qualified as financial advisors. Take advice, rather than try to fix it yourself. You’ll be pleased you did. Helen Dale is a Senior Consultant with Holborn Assets with over 5 years experience in the Dubai market place. Qualified under The Chartered Insurance Institute UK, Helen provides independent advice to individuals & corporates on insurances, regular savings & lump sum investments. Contact Helen
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- The US Dow Jones fell by 33.8%