City Eye: So this is the month when it all goes quiet for shares?

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The Independent Online

Good riddance to August. Not much is supposed to happen in the markets over this month, according to investor and market historian David Schwarz – a charming fellow who is wheeled into TV and radio studios whenever there's a financial plunge or spike. Broadly speaking, August has been a positive month for equities over the decades, trending up by about 1 per cent more than half the time, and coasting down by 1 per cent roughly two years out of five.

But the latest barrel of gasoline on the bonfire of credit hysteria (Bank of America's $2bn midweek cash injection to troubled mortgage lender Countrywide Financial) led pathetically grateful markets to jack shares up by 3 per cent in a day.

The yo-yoing will leave equity investors around 3 to 4 per cent off on the month, I'd suggest – but that's just my best guess. The credit attitudes that matter over here haven't changed much: the Bank of England and the European Central Bank remain modestly hawkish. The US authorities, meanwhile, seem to be reacting to events – not much more.



Summertime blues cured

Another reason to celebrate the end of August will be the delivery of windfall bonuses to deposit and mortgage holders with Portman building society. The cash hits their accounts on 1 September, following the society's takeover by the UK's biggest mutual lender, Nationwide.

Carpetbagging is very much an Eighties sport, but for those who opened accounts early enough, I'd suggest piling spare capital into Skipton building society. New account holders are, of course, required to promise to pay any windfalls to charity. But if you strike quickly, a decent capital balance could prove profitable in the medium term. Skipton management have pulled back from the brink of doing a deal more than once, and I don't see it staying mutual for ever – although the change of regime at Downing Street (Messrs Brown and Darling are not going to want to be seen allowing small and medium-sized building societies to disappear) means that a short-term move is unlikely.

Who's a naughty boy?

Celebration number three will be hosted by Kevin Beeston, executive chairman of services group Serco. Beefy but benign, Mr Beeston steps into a non-executive role after a decade of flying in the face of the Higgs doctrine on boardroom practices.

"I hope I'm the exception to Higgs," he says. "If you've been chief executive, you're not supposed to be chairman as well. But as I've been finance director too, I think I'm a special case."

I think the most anti-Higgs executive and investor I've met is Lord Young, ex of the Thatcher government and now a serial mentor to entrepreneurs. While always the perfect old-fashioned gentleman, his language can deteriorate when the Higgs doctrine is mentioned. But his words are insignificant in comparison to Mr Beeston's actions. When you consider that Serco has been built up into a business turning over £2.5bn, based largely on its success in doing business with the public sector and generally trying to be a model corporate citizen, Mr Beeston comes across as quite a naughty boy.

Witness, for example, his views on tax collection, which he seems to view as an impediment to Serco getting due credit for its waste collection, prison management etc: "I'm convinced that PAYE... has played its part in allowing inertia in public service reform, as no one has to directly write a cheque out to pay for their public services."

By the way, Beeston is a director of Ipswich Town Football Club, and Sir Derek Higgs is on the board of Coventry City. The two clubs meet on 22 September.

martin@martinfdbaker.com

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