What is a good investment …

 …….and how to know when to buy and sell!

FUNDAMENTALS: For every seller there has to be a buyer. What tips the value of an asset is whether there are more buyers than sellers or vice-versa.

FUNDAMENTALS: Cash and cash-flow is king. Many individuals and companies will go bust in the next 24 months, despite them appearing successful from the outside looking in, purely because they have insufficient cash-flow.

It is my 10^th anniversary in the profession of financial advice and I have advised on many tens of millions of pounds of investments in that period. I was an early adoptee of asset allocation and the results largely speak for themselves. Despite the last 12 months, our clients continue to return questionnaires saying they are satisfied with us as a company and this is largely due to the longer term strategy of holding assets – or in other words, patience!

We live in an impatient society, where saving for an asset has largely given way to borrowing money to buy an asset (or what consumers call assets but are in fact nothing of the kind). They say the meek shall inherit the earth – purely on a financial level, I think that could also read, the patient ones shall ultimately be rewarded! Especially if they make a plan!

Asset allocation largely reduces the timing factor, but let us be honest – if you can also have an idea when to buy and sell and what is a good investment, it helps!

So here is my personal guide, considering the following 3 circumstances:

1. If some people or articles are talking about an asset.
2. If lots of people or articles are talking about an asset
3. If everyone and every newspaper is talking about a sure fire winner

Taking these 3 circumstances let us look at the various buyers and sellers:

If you are considering buying the asset:

1. Then review it yourself before buying, and make a proper plan!
2. The majority of the time, you have probably missed the boat.
3. Almost certainly you have completely missed the boat, and ignore it!

If you are holding the asset:

1. Then you should be cautiously happy!
2. Sell at least half of the asset (if you can), that way you are taking half your profit and leaving the remaining to further profit or possible loss.
3. Almost certainly you should sell most of the asset and take your profit!

If you are considering selling the asset:

1. Then review it yourself before selling, and follow your original plan!
2. Sell at least half of the asset (if you can), that way you are taking half your profit and leaving the remaining to further profit or possible loss.
3. You already are thinking of selling, so sell!

If you follow my simple guide you will see how I was recognised in the Sunday Times in 2001 as correctly predicting the end of the ‘Dot.com’ bubble; also, how I wrote in 2003 and presented at seminars that it was a good time to buy into equities, and how I said from 2006 onwards at seminars and in numerous articles that people should sell residential property.

If you can remove the emotion of feeling that you are somehow missing out on what everyone else has, then you will find a good investment for yourself following the above simple guide!

James Pearcy-Caldwell

Director

Please note that the opinions expressed in this letter must not be construed as statements of fact – you should carry out your own further research before coming to a decision and before taking any action.

The views in this letter represent the opinions of Aisa and should not be construed as a statement of fact. Further advice should be sought before actioning any investment or tax advice. The Financial Services Authority does not regulate opinions on the economic outlook, nor does it regulate some forms of tax advice or comment such as this.

Dated 2 September 2008 – valid for 6 months. Aisa Direct Ltd, authorised and regulated by the FSA as Independent Financial Advisers. 1 Fordbrook Business Centre, Pewsey, SN9 5NU

* This newsletter has been prepared with all possible care to ensure its accuracy. It is based on our current understanding of legislation and HMRC practice. 

* Neither Aisa Direct Ltd nor any of its employees can accept responsibility for any errors or omissions. You should seek further professional advice prior to action.