Is now a good time to invest?

So we’re on the brink of recession, if not already in one.  Another dismal day on the markets, with shares dropping around 9% approx.  All sectors today in the British economy have fallen substantially.  However, doesn’t this scenario provide the opportunity investors are looking for?

It doesn’t take a rocket scientist to work out that buying shares at their lowest and selling at their highest is the utopia of investing in the markets.  In fact many advanced investors do not sell their shares as they drop but simply buy up more of the stock in anticipation of the upturn.

Warren Buffet yesterday told American investors to “buy American” as he is doing, supposedly because many US companies have fallen as far as they can….

…and this is the question; when will the markets hit the bottom?  I have friends who have started buying up banking shares in RBS and Barclays because they feel the bottom has been reached, or at least has nearly been reached, when taking a long-term perspective.  As always, investing is influenced by those human emotions of confidence and fear.

Logic too should play its part, and this is why some investors are getting proactive now.  It is however down to our political leaders to change the emotional momentum right now and we wait on their every word.

Is it at all possible to find an investment which guarantees a minimum return of 25% over five years with low entry & with optimum security? Well in difficult economic times there is one such company who can provide such a solution.

Discover And Invest of London aim to bring to the market ethical and guaranteed return investments, and their latest product, the stamp investment, is intriguing to say the least.

Key Points

•     Minimum guaranteed 25% gain in 5 years from world’s leading stamp company
•     Massively undervalued asset class
•     Rapidly increasing demand from China, Brazil, India and Russia
•     Reducing supply as rare stamps are getting rarer
•     Stamps have outperformed traditional investments over at least the last 10 years
•     Provider is 150 years old and is debt free
•     Provider manages £24m worth of investment grade stamps
•     Free storage and insurance
•     Returns over the last 10 years averaging between 12-30% per annum compounded!

Click Here to Find Out More Information !

I’m sure we’ve all had those moments where we encounter something new and wish we’d had the idea first ourselves? This happened to me a few months ago. Having worked in the world of property websites for a number of years I am all to familiar with who the ‘players’ are, who the strong independents are, who delivers and who doesn’t, and know all to well just how fragmented the marketplace is as a whole.

Having stepped away from this world I like to keep tabs on how they’re still performing and who the new players are. New sites emerge fairly frequently so it came as no surprise when I read in one of Global Edge’s mailers about LeadsAndAgents.com. By contrast though to other sites I have encountered recently, this one certainly caught my attention.

It’s fair to say a good few of us are familiar with auction sites such as Ebay, so it comes as a huge surprise that no-one had thought to apply this business model to a property portal until now - LeadsAndAgents do just that. The homepage has a list of subsections divided into regions with a number of active leads in brackets that can be purchased. Upon further inspection the leads contain good information such as budget, location & timescale which would allow an agent to accurately ascertain if they had a product for the potential enquirer. Then you simply bid against each other, and once the time has elapsed the highest bidder is forwarded the full contact details.

As mentioned, I encountered this back in the summer, and I have chosen to write about it now as I checked back this morning to see that they have, at time of writing, no leads at all. Why? Once can only point the finger at the turbulent times the property industry finds itself in currently, as surely something so innovative should really flourish in times such as these?

It’s all well & good for me to say that I wish I had this idea first and a few years ago, but what if the creators of this site had done just that themselves? It would be interesting to have seen how much market share a site such as this would have held back in the summer when I first encountered it.

I am one of many who take what one reads in the media with a pinch of salt. Only today I read an article in one of the nations more reputed tabloids in which a columnist commented that our recession will be short but sweet. This came from the same person I can remember reacting to the Lehmans collapse recently by claiming we will not be plunged into a recession at all! Now he admits we are already in one. A quick bit of googling and I discover another fairly recent article by the same person claiming that the markets are set for a buoyant end to the year! I dread to think what he might write if his savings were with Icesave.

So consistency has never been the name of the game in media circles, that’s no secret, and it reaches the point where it’s best to see beyond the headlines and find out the story for ones self. At the time of the Lehmans collapse I took great interest as an old friend had earlier in the year been delighted to have secured a position with them. Naturally I became concerned, wondering how this had affected him. We met for lunch in Canary Wharf and it was the case that he, like others, had been ‘approached’ weeks in advance by competitors and as such was now secure.

However I was not prepared for the almost circus-like activity in the busy bar we had entered. Every table seemed to have piles of printed matter in front of everyone sat at them and individuals were walking round between the tables holding brief conversations with those sat & leaving with copies of said printed matter. I had experienced ‘speed headhunting’ for the first time!

Upon leaving to return home I thought back to what I had read in the paper just a day before. One described turmoil, another spoke of the collapse of Canary Wharf, and another even referred to the activity in Canada Square to be similar to a scene from 28 Days Later! My experience was the opposite. The atmosphere was calm, even jovial, and most certainly not pessimistic. Now of course this was not the case for everyone and yes there were those seriously affected by the losses, but the key point in this is that once the media hears of a story they love to inject a bit of fear factor, don’t they? And why? Because we, as a whole, believe it.

I received a circular email today from an exhibition organiser with whom I am subscribed and whose events I have been attending for a few years now. The narrative within was very interesting to say the least, apparently the thousands of investors not yet affected by the credit crunch will be attending & looking to buy property. Oh really?

Having attended the latest ‘round’ of exhibitions the first thing I have noticed is that the numbers are down. Not just that, but the quality appears to have been understandably poorer than before. I gauge this not so much from the agents themselves but from their reaction when they find out I am present as a trade visitor! This time last year for example I attended exhibition X representing my then employer seeking to pitch business. I would be greeted with a smile; cards exchanged, wished well, invited to call back but most importantly asked politely if we could speak another time as they were keener to attract the members of the public passing by. Fair enough, I don’t blame them.

Last month I went to the same exhibition representing Discover And Invest, a different company but with the same expectations for my interactions with agents. Aside from my initial observations that it was considerably smaller than the last time I attended, or even that you could count the number of developers exhibiting on Captain Hook’s bad hand, it was the looks of disappointment I found myself facing. I would approach the stand, they would smile, I would announce myself as trade, and they would heave a forlorn sigh.

Of course, I took no offence and actually managed to hold longer conversations due to the lack of people seeking to speak with them; but the fact remains that the difficult times the property industry is currently encountering has now filtered through to the perceived happy hunting grounds themselves – the exhibition halls.

Marketing slogans are expected and welcome, but I am of the opinion that if an industry professional such as myself can notice the decline in both attendances and quality over a period of time then what of the seasoned investor? Could they perhaps have noticed this also? I think so, en-masse I would say. So there are thousands of investors not yet affected by the credit crunch? It’s a bold statement, although completely transparent.

Much is being made of the UK exposure levels in Icelandic banks, from individual investors to a number of firms and even councils.  Today it has emerged that financial experts have been sent in to 3 as yet unnamed UK councils to look into the shortfall of funds….not a good situation.

The Icelandic government seem to be working “night and day” though to solve the problem.  Not only have they cut their interest rates by 3.5% to a new level of 12%, but they are hoping to wrap a loan from Russia to cover the losses.  It is thought much is recoverable over the next 2-3 months.

So how is this affecting everyone?  Certainly it will reduce the spending habits of anyone exposed to the banks.  The bigger worry though seems to be that, in the event that they cannot recover their funds, significant tax rises and further service cuts will result from the councils that have been affected.

We have come to a point where nationalised banks, both abroad and at home, need to give the public full transparency into their credit exposure.  We need to know if the money being pumped into the banks is covering loss of profit margins or to actually provide funds that do not exist anymore, or may not exist in the future.  Only then can we understand the full extent of the current situation.  Here’s hoping it is not the worst case scenario.

Imagine a scenario whereby this time last year you are given a fictional, say, £500,000 and the question was asked of you just where you would look to invest it to make it grow. At the time I think I would personally have looked towards splitting it between a number of ‘emerging’ destinations such as Egypt, Romania, Belize, Argentina & the Philippines to name but a few options. Either way, it would have all found its way towards the property sector, perhaps diversifying into land, particularly in the case of Argentina.

Imagine also if the same question was asked of me six months ago. Uncertainty had begun to creep into the property industry, plus an increasing amount of agents threw everything at marketing to scrap for the reducing amount of enquiries out there. One this is for sure, my answer would have been different. Whilst I still might have looked towards the Central & South American destinations for a portion of this amount the remainder would have gone straight to the investment banks. It would have made sense. My money would always be safe with the investment banks, right?

So we return to the present time and I am still sat here with my (albeit fictional) half a million, and I am quite frankly panicking. Only a tenth of this would be protected by the government which would stand me to lose a lot of money if the markets continued their collapse. So my choices would be to move it abroad perhaps? But is there the need when it can willingly remain here? There are options.

There are always ideas that thrive in times of recession and in this particular scenario the prudent thing to do would be to seek securely package alternative investment products of which Discover And Invest has two such schemes, one long term one short. Investments secured by assets are few and far between, but if sought are worth looking towards – just make sure the provider can answer every question and detail regarding timescale and security. Surely if this can be achieved it is best to watch your money grow than be left within an institution in freefall?

..and as I write a short piece on the UK bailout plan, it has emerged that the Bank of England has cut interest rates by 0.5%…hardly surprising.

It does show, however, that the government is trying to curb a recession and in doing so is effectively allowing inflation to rise well above it’s stated long term immovable target of 2%.  A 2% inflation target, you will recall, is a measurement Mr. Brown has stated repeatedly over the last 10 years would be the benchmark for the economy.

It is also interesting to note that this cut in interest rates is not a UK action but appears to be a co-ordinated global action.  Canada , Sweden and Switzerland today have also cut interest rates by 0.5%.  China has also announced a second cut this month in a separate move.

Ultimately, will this work or are we fighting a slow death here?  I believe this is the start of many more cuts in the hope of stimulating the economy.  What people must realise is that we live in a false economy, heavily debted and over valued.  The lack of regulation, personal and corporate greed has contributed hugely and we are paying a very heavy price for this.

I don’t believe interest rate cuts are really the answer, although they will undoubtedly help homeowners on variable rates.  The single biggest problem in my view is the level of individual debt, and until this is resolved, either by cancelling all existing debt, or by heavily subsidising it, economies will not be stimulated to the level we need.

So as predicted in the last blog, the UK went for a bailout of the UK banking system to try to stem the flow of negative sentiment in the markets.  There is an interesting argument as to why the banks are being nationalised and what it means for the future of investing.

Essentially, nationalising banks means government has a much larger influence over regulating what the banks do; a good thing yes?  Not necessarily.  Most high return investment products came from the investment banks, who as we all know are on the road to extinction.  Retail banking, part nationalised, may well become the bank industry norm, where government low return products are the major routes to investment in the future.

So can we still expect to find future high return investment products?  My opinion is there will be, but they will be few and far between.  It is will be up to entrepreneurial minds to come up with more creative ways of investing.  This is a topic which I shall cover more of in future blogs.  Chins up everyone!

In the current marketplace, it is interesting to note that there is a high level of demand for varying pieces of land with planning permission in emerging markets. Why? Well, the demand is coming from two main types of buyers. Firstly, nationals who have emigrated who wish to buy ready to go land back home to build on or to invest in for strategic future purposes. Secondly, an increasing number of corporates are looking for market share in emerging markets and are seeking strategic sites where they can build commercial, alternative energy or logistics operations. Discover and Invest Ltd., the london based investment consultancy, has recently sourced and launched 3 stunning sites which fit this criteria.

The first site is a 40,000 m2 of strategic land in Plazovets, from a stunning, elevated position 600m above and overlooking the Black Sea coastline in Bulgaria. The company’s project team on the ground are currently one month away from achieving full planning permissions for a ready-to-go property development project. The site is also extremely suitable for Wind or Solar investment projects, with the change in planning for such a project taking in the region of 4-8 weeks. A 10% deposit required which will be held with 3rd party lawyers until planning is approved. It is also worth noting that VAT is not payable on any land purchases in Bulgaria.

The second site is situated around the Bulgarian capital city, Sofia. This is another elevated, well located site of 5600m2, which offers stunning views of Sofia from the desirable upmarket commuter area of Bistritza. The land is strategic due to the fact it is 10 minutes drive from the new Sofia Business Park, 20 minutess to downtown Sofia, 20 minutes from the airport and 30 minutes from Mount Vitosha for winter weekend skiing. The land is suitable for either commercial units, or a high end villa development aimed at the more wealthy city dwellers looking to live near, but not in, the city itself. All the usual amenities exist such as schools and supermarkets, as well as the infrastructure necessary.

Finally, on offer is a rare plot of 980m2 situated in a developed residential area in the commuter zone of Krustova Vada in Greater Sofia. The plot is situated on a built up residential street with all the usual infrastructure and amenities in place. This is a wonderful opportunity to build a large house or small group of townhouses, where the land will be regulated in 2 months with the project team available to complete this if needs be. Again a 10% deposit is required, to be held with lawyers.

So if you are a Bulgarian, or non-national looking for an interesting spot to build or invest in or are commercial firms looking for some options to start operations and gain market share, Discover and Invest Ltd have some unique options for you.

To enquire, please contact Chris Goodman on London 0207 060 4404 or email chris.goodman@discoverandinvest.com