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As the global economy attempts to sort itself out, my goal is to seek out some ‘easy money’ opportunities for 2013.
Hurrah, yes, it looks like they have kicked the Greek crisis down the street again and all eyes are back on the USA and the impending fiscal cliff. Does anybody really think it won’t get sorted? My best case scenario for the economy is that we will see a long slow winding road back to ‘normality’ and my worst case scenario is that we end up like Japan; going nowhere for 20 years (or more).
The Footsie (FTSE:UKX) chart supports my worst fears. The monthly chart shows a secular (persistent) bear market from 2000. Look how the price failed to make a higher high in either 2008 or 2011. As things stand the FTSE100 could rise to 6700 and it would still technically be in a bear market.
The 12 year range of 3600- 6800 has provided some wonderful trading conditions but right now we are stuck in the 4800-6100 range and that’s not quite so easy.
Going into 2013 I’m nervous. I don’t want to be caught out in a bloodbath (a break down of 4800) and there isn’t much upside in a break of 6100 unless a new high can be made, which doesn’t look very likely. How then do I make money?
I have found what I think are some good ideas. They are not conventional and, compared with the thrills and spills of buying gold miners/resource stocks with assets located in parts of the world you wouldn’t even want to visit, they are boring but I believe each has some merit. Over the next few articles I will share them here.
The first is The Close Enhanced Commodities Fund II (CED2). It was set up in June 2007 and will wind-up in June 2013. The wind-up price should be 200% of the rise in a basket of commodities. I say should because if one of the banks behind the fund goes under then the payout won’t be 200%. This happened to CED2’s older sister CED but as we hurtle ever closer to the wind-up date there is ever more hope it will all be OK. To mitigate any price shocks, the final price will be an average of the basket price on the last day of each month for the last 12 months. They last reported in October that the payout might be 144p but that could of course go up or down.
The basket contains 8 commodities in equal size and this table is reproduced from the RNS on 3rd October 2012 showing how the 144p is calculated:
I bought three times at £1.115, £1.22 and 1.265 and the current offer is £1.35. If the basket broadly stays the same for the next seven months and there’s no bank default, then there’s still a potential 6% on offer, which works out at 11% annualised.
Caution: the final price could be higher or lower, it all depends on what happens to the basket of prices.
About:
Susan Marmor has been trading her ISA and SIPP full time for 7 years. She has made money every year, including 2008. She believes that making money is about picking the right shares at the right time and using sound money management techniques to manage risk.
For her trading she uses a combination of sound fundamental data and technical analysis (which involves using price charts and some of the fancy bits and pieces that go with them). She runs the occasional seminar to show people what she does and how she does it.
Disclaimer:
Please keep in mind that all comments made by Susan Marmor are for educational purposes only and should not be construed as investment advice regarding the purchase or sale of securities, options, futures or any other financial instrument of any kind. Consult with your investment advisor before making an investment decision regarding any securities mentioned herein. Susan Marmor assumes no responsibility for your trading and investment results. Susan Marmor does not warrant completeness or accuracy for any observations made herein, or warrant any results from the use of the information. Susan Marmor may have a position in the securities and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. There is a very high degree of risk involved in any type of trading. Past results are not indicative of future returns. Securities, options, futures and any other financial instruments can go down as well as plunge.
Nice overview of the 20 year trend.
You need to lose the pictures of Tom’s stomach etc. as they take an age to load.
Good Luck!
Thankfully I have no control over Tom’s stomach!
Thank you re the chart, the bigger picture is quite a worry.
The FTSE has risen 6.42% since the day I declared myself a full-time trader (26/9/05). If someone had looked into the future and told me that we were going nowhere….I might just have gone and got myself a job!
But here we are and I think I am well placed to deal with whatever is thrown at us in 2013. More articles with more ideas to follow.
S