I believe in the Santa rally, in factI predicted it several weeks ago, and have been gratified to see the FTSE 100 hop over the 7,000 barrier as a result. However, I dont think that this is a particularly good weekto buy shares, any more than I expect Father Christmas to pop down my chimney on Christmas Eve.
Yule be sorry
Im all in favour of festive stock market fun at Christmas. I just dont like buying shares when the punch bowl is full, the Proseccois flowing, and investors are giddyon seasonalfizz. The danger is that you end up nursinga rotten New Year hangover.
I dont like buying shareswhilemarkets are near their all-time highs (or above them in the US), because its too easy to end upoverpaying. That could beparticularly dangerous this year, with2017 likely to bechoppy. Overdo itnow and you couldquickly getstuffed.
Cold turkey
Just think what lies ahead over the next few months. Prime Minister Theresa May triggeringarticle 50. PresidentDonald Trump triggering who-know-what. Tenseelections in the Netherlands, France and Germany, which may continue the populist surge. Further tensions between the West and Moscow, or even Beijing. Growing concerns about the Chinese credit and property bubbles.
Rememberlast January, which started with an instant stock market rout? Some may look on that with a shudder, but experiencedinvestors will only be shuddering if they wasted what wasa fantastic buying opportunity, withthe FTSE 100 slumping as low as5,557 in February.
Santa and Scrooge
Its a strange fact of investment life that it pays to play Scrooge when everybody else is dressing up as Santa, and Santa when theyre channellingScrooge. The best time to buy shares is when investors are huddling over a single tallow candle and muttering bah humbug as they watch the rich meatof their portfolio turn into thin gruel.
You certainly dont want to be parting with your investment pennies when everybody is rolling around with twinkling eyes and ruddy cheeks, full of questionable good cheer before the inevitable hangover kicks in. So Ill be sitting this partyout.
Happy New Year
I reckon markets could do surprisingly well next year but there will be plenty of dips or what I call buyingopportunities along the way, and Im keeping my powder dryfor those.
Shareshave been a great place to put your money in 2016. The benchmark FTSE 100 index started at 6,311 and currently stands at 7,041, a rise of 11.6%. Throwin its current yield of 3.83% and you have a total return of 15.43%. By comparison, the average easy access cashpays just0.39%, according to Moneyfacts.co.uk. Stock marketshavereturned40 times that sum.
Im keento buy more shares, onlynot today. Thisisnt the time to be saying Ho Ho Ho, but No No No. The real fun starts in January.
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