Julian Knight: You can call it spring optimism, but shares feel worth another go


Regular readers would probably not describe me as one of life's natural optimists. But this week I have been feeling rather chipper and it's not just the onset of spring which has brought this transformation in mood. In fact, it's no particular event, rather it's what hasn't happened in the past week or so.

If the Italian election result – chaos as always – had occurred last year I reckon we'd have seen a global firesale of bonds and equities. But this time around – largely due, I think, to the promises of the European Central Bank to backstop debtor nations – the markets have taken Italy in their stride.

Likewise in the States, the to-ing and fro-ing on the edges of the fiscal cliff has barely troubled global stockmarkets. In fact, the Dow Jones Industrial has just reached an all-time high and is way north of 14,000 points. And the FTSE 100 is within 10 per cent of its all time high. We are nearly back to levels that we saw at the time of the bursting of the dotcom bubble at the start of the century.

The intervening years have been incredibly difficult for private investors – big and small – but since the tanks rolled into Baghdad in 2003 we have seen share prices double, that is a far better rate of return than you would achieve through cash savings and even in much of the UK, property.

Secretly, quietly, shares have been one of the great asset classes to own during the past 10 years and what's more it's not just capital uplift. Instead of retrenching on dividends the great habit of actually returning value to shareholders has spread around the globe. Put simply, it used to just be shares in the UK and US which paid proper dividends, now many of the great companies of mainland Europe have got in on the act – particularly those with access to key far east markets.

And in emerging economies – which in the case of much of India and China is a misnomer as they have by my book emerged – there is a growing trend to pay dividends. Putting aside the horror show of the financial crisis, these are stirring times to be a share investor.

And yet, and yet, many of us fear to tread into the stockmarket and I can understand why. When values turn south they do so very quickly and many who invested in the late 1990s in, for example, technology funds are still counting the cost. This coupled with the financial crisis put many investors off for life – totally understandable.

But with cash earning you nothing, property in most parts either declining or in an unaffordable frenzy (such as central London), the bond market in many people's views massively overvalued there is a real case for looking again at the stockmarket, but don't leave timing to chance. The best way for nervy or inexperienced investors to gain access is through collective investments or a range of solid dividend paying shares and to do it piecemeal – drip feeding cash in so if prices do fall then your most recent investment actually stretches further.

Perhaps it is just that spring is in the air that is causing this sudden positive mood, but sometimes the best signals aren't what happens but what doesn't.


Payday: Reform or die

The Office of Fair Trading is threatening payday lenders with closure and I think that is fair enough in most cases. The interest rates are usury, the contracts terms often unfair and the marketing, capitalism at its most brutal.

But in all the hoo-ha, we shouldn't forget these lenders exist because people can't access mainstream credit and times are tough. Reform is better than closure.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

    'We will not sit down with Nicola Sturgeon'

    In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
    VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

    How ordinary Britons celebrated VE Day

    Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
    They came in with William Caxton's printing press, but typefaces still matter in the digital age

    Typefaces still matter in the digital age

    A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
    Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

    'Missing link' between Earth's two life-forms found

    New microbial species tells us something about our dark past, say scientists
    The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

    Pan Am Experience: A 'flight' back to the 70s

    Tim Walker checks in and checks out a four-hour journey with a difference
    Humans aren't alone in indulging in politics - it's everywhere in the animal world

    Humans aren't alone in indulging in politics

    Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
    Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

    Crisp sales are in decline

    As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
    Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

    Ronald McDonald the muse

    A new wave of artists is taking inspiration from the fast food chain
    13 best picnic blankets

    13 best picnic blankets

    Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
    Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

    Barcelona vs Bayern Munich player ratings

    Lionel Messi scores twice - but does he score highest in our ratings?
    Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

    Explosive batsman who sets the range for Kiwis' big guns

    Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'