Ancap Agency

Finance Portfolio Research & Analysis for August 4 – 8, 2008

From our USA research division and matching USA strategy analysts, the following financial analysis excerpts are from revisions recently completed on USA based investment portfolios:[1]

SCR Step 1 – Analysis: From No. D2 (USA) Financial Portfolio Research Revision –

[iShares (Wgt: MC)] D.J. U.S. Financial Sector (IYF) vs. [SPDR (Wgt: MC)] S&P 500 (SPY):

(1) Observation – Relative Strength: Results in the relative strength analysis of D.J. U.S. Financial Sector (IYF) versus S&P 500 (SPY) indicate that IYF is neutral to SPY on a relative basis.

(2) Observation – Regression: Comparison of the linear regression to the time-series that has a 3-period forward shift finds the following formation: The linear regression is above the time-series. Since the linear regression provides the “best fit” to the price path, this has positive implications for IYF. While this could indicate a bottom in the financial sector contraction, it is with weak indicators. Thus, we have concerns about the sustainability of this recent price shift for IYF.

(3) Observation – Price Performance: D.J. U.S. Financial Sector (IYF) shows a continuation since late July of a positive / neutral price path (fairly flat slope) on weak indicators.  Whether this development continues or a negative price path resumes will be determined by the actions of the Federal Reserve to any further bank debacles.

[Reference Charts: D2-11 (relative strength); AD2A-11a (regression); AD2B-11b (price)]

First, and furthermore, for most investors, a diversified investment portfolio approach combining stocks, bonds, money market securities, etc., is optimal. While financial diversification cannot protect against a loss from a declining market, it can reduce the overall portfolio’s volatility. With the globalization of information technologies, college education becomes a prerequisite to most careers.  A goal of successful investing thus becomes crucial in providing the upper level education necessary for your child’s future.

Second, in consideration of that goal, studying the information available on this site, which has been kind enough to host our research in this article, will help.

At www.StrategicCapitalResearch.com, we provide additional finance educational materials to what you find here in both investment books and videos. Between the two sites, you should be able to find enough information to get started toward achieving your education investment goals.

Third, to the above analysis excerpt, the usual disclaimers apply. Since all Strategic Capital Research publications provide research that is conducted using historical data, a reminder needs to be made that the analysis of past market reactions cannot predict future market actions. In particular, no amount of historical data can predict the sudden changes that occasionally occur in financial markets.

[1] Reference chart numbers beginning with an “A” refer to the auxiliary analyses completed on the “D” portfolios located at www.strategiccapitalresearch.com/research.html

After a year which has been tricky for some and catastrophic for others we could be forgiven for looking towards 2010 with some trepidation and in some of the more morose corners of industry dare we say it, a heavy dose of doom and gloom? Well those hardy soles in the ever exciting SME market are having none of it – despite the sector being hit harder by the recession than most.

At least that is what the results of a recent report from British communication giant BT would seem to suggest.

The 2009 BT Pulse report has revealed that an overwhelming three quarters of SME’s predict the economy will see an upturn in 2010. Further to this over 60% of the respondents were confident about their businesses prospects for the coming year and an impressively confident 35% even predicted their situation will have improved as soon as January 2010.

The report surveyed 7,200 Directors of small and medium sized enterprises and a strategy director at BT commented that the findings “show that the economy is at a tipping point. Despite the obvious knock to confidence, positivity about when the upturn will come is encouraging.”

With 45% of the respondents going as far as saying that they have streamlined their business so that they are now operating even better as a result of the downturn, it seems that many of these SME operators are primed to thrive as soon as the market catches them up.

These bold predictions have also been echoed by the Institute for Chartered Accountants in England and Wales (ICAEW), who have also recently released a similar statement that “confidence among business professionals has turned positive for the first time in two years.”

However not all quarters of the UK industry are predicting quite such a swift return to the good times as the British Chambers of Commerce (BCC) has issued a slightly more ominous statement that although the recovery may have started, the economy still faces considerable risk.

According to the organisation, GDP will drop by 4.3 per cent this year, followed by growth of 1.1 per cent in 2010 – an improvement on the BCC’s June prediction of 0.6 per cent.

David Kern, chief economist at the BCC, says: ‘While we expect a gradual improvement over the next two years, the pace of UK expansion is likely to be weak by pre-recession standards. It is critical that wealth-creating businesses have adequate capacity to respond to an upturn in demand when the recovery strengthens.’

However despite the general confidence, many SME’s are still walking a dangerous tightrope leaving themselves unnecessarily open to adverse risk as they cut their policies and leave themselves underinsured.

Of course should these buoyant entrepreneurial companies live up to the high expectations they are piling upon themselves then it follows that their insurance needs will grow too and with the aid of a good broker they may just be able to manage the balancing act of ensuring that their cover is adequate and competitively priced.

With the SME sector looking once again to rise like a phoenix from the ashes the role of the high street commercial insurance broker could once again become a crucial link between the sector and the general insurance industry.