Diversify and avoid coffin corner!

Stock MarketOn the surface the UK economy looks rosy, unemployment is down, growth is fastest amongst the G7 nations, the housing market is booming and even the weather has been dry. However the stock market may be approaching an interesting juncture known as “coffin corner” where the slightest miscalculation could lead to a crash. Those in charge of our economy are in uncharted territory so events need to be handled carefully. The USA are reducing their monetary stimulus and the Governor of the Bank of England has hinted that interest rates could rise in the autumn. Share buy backs have been at record levels, corporate debt is higher than in 2008 and earnings have been downgraded for the 3rd consecutive year.

What does this all mean for the private investor ? There is no need to panic but investors need to prepare for a bumpy ride. In times of uncertainty the old mantra “spread your risk” rings true and the canny investors will ensure portfolios are diversified across all sectors. Alternative assets such as fine wine have historically performed well in times of economic uncertainty offering a stable investment asset providing the opportunity to hedge against inflation and currency pressures. With Blue-chip Bordeaux offering the opportunity to buy at the bottom of the market now is the time to call your Vin-X broker to discuss your options.