Is now a good time to buy shares?

The Jewish Chronicle - - Business -

IT has been an­other tu­mul­tuous few weeks on the stock­mar­kets. The bench­mark FTSE 100 in­dex has reached a se­ries of new lows as con­cern about the bank­ing cri­sis grows, and in­vestors are ques­tion­ing the abil­ity of global gov­ern­ments to deal with it. Volatil­ity on Wall Street has hit its high­est level for years.

But de­spite all the doom, some mar­ket-watch­ers be­lieve we have seen the bot­tom and that now is the time to be bar­gain-hunt­ing. Renowned fund man­ager An­thony Bolton, who made his name at the Fi­delity Spe­cial Sit­u­a­tions fund, has started to put his own money into the stock­mar­ket for the first time in two years. James Mon­tier of So­ciété Générale has iden­ti­fied value in large-com­pany shares in­clud­ing BP, Eric­s­son and Nokia. In­vestors Chron­i­cle’s stock screens, which fil­ter the mar­kets seek­ing cheap shares, have un­cov­ered plenty of candidates.

For in­vestors pre­pared to take a long-term view, there are bar­gains to be had. But there are plenty of rea­sons to be wary in the short term. Even if the un­cer­tainty around the bank­ing sec­tor is re­solved over the next few weeks, in­vestors still have to con­sider the pos­si­bil­ity of the UK go­ing into re­ces­sion and fur­ther hefty falls in the hous­ing mar­ket. If you’re pre­pared to take the risk, buy­ing shares now could turn out to be a very prof­itable ven­ture. But the re­cov­ery will be nei­ther quick nor smooth.

I men­tioned three weeks ago that US shares tra­di­tion­ally do well over Rosh Hashanah and badly over Yom Kip­pur. De­spite the tur­moil, this once again proved to be the case in 2008. Over the two days of Rosh Hashanah, the S&P 500 in­dex rose by al­most 5 per cent — al­though, un­usu­ally, it fell in the days pre­ced­ing the fes­ti­val. On Yom Kip­pur, usu­ally a bad day for the mar­kets, the S&P 500 fell by 7.6 per cent.

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