Can the gains in the FTSE 100 be sustained?

It’s been a quite remarkable start to 2013 as the FTSE 100 boasts its best January performance for 2 decades. During January it rose 379 points or 6.43%, its best start to the year since 1989.

Almost £100bn has been added to the value of FTSE 100 in January alone, which is raising fears that the index may have grown too quickly and that the appetite amongst investors for equities may soon come to a shuddering halt.

The rally in the markets has also been felt in other global stock markets, with Tokyo’s Nikkei index rising 7.2% and the US Dow up 6% in the same period. What many find surprising is that climb in the UK in the FTSE 100 comes at a time when official figures show the UK economy contracted 0.3% in the last quarter.

Not only has the value of FTSE 100 shown growth in the first month of 2013, more interestingly perhaps, is that the most recent climb comes after a steady rise in the index thought 2012, with any annual rise of 5.8%, indicating a longer term trend.

Ironically it was the banks that saw some of the biggest increases in their share prices in 2012. Lloyds banking shares rose 85% in the year eclipsing all other FTSE 100 constituents. Royal Bank of Scotland too saw the value of its shares soar by 60% over 12 months, the fourth best performing company in terms of share price performance.

So what are the factors driving the FTSE up? The first place to look is across the Atlantic, investors finally have some encouraging data on jobs, and more confidence in the manufacturing sector. This data has been behind the Dow Jones Industrial Average, breaking through 14,000 for the first time since the end of 2007.

In addition in recent months, equities have become an increasingly attractive investment option for investors as they look for returns during a period of historic low interest rates. There is cautious optimism about economic prospects and some record levels of company profits. Fears are beginning to subside about the Eurozone crisis which means that investors are more willing to invest again in shares in companies. However, this recent return to equities has come at the expense of investment into currencies and bonds.

Is the performance of the FTSE 100 really that important? Well actually yes, certainly the performance of those major companies that make up the FTSE 100 is very important, not just here in the UK, but internationally. The total combined value of the 100 companies represents 7.8% of the world’s equity market capitalisation, and 85% of the UK’s equity capitalisation.

Whilst the rise of the FTSE 100 currently appears to be bulletproof, with the UK on the precipice of a triple-dip recession, history tells us that inevitably rallies do always come to an end. The question no one knows is when.

Find Your Way Out Of Credit Card Debt With Credit Restoration

Having good credit is important for many reasons in the financial and social climate of today. Not only is it critical for securing credit to purchase large ticket items such as cars and homes, you even need a good credit rating to rent an apartment and to be hired for some jobs. Having a lot of credit card debt can work to your detriment if you are struggling to make the minimum payments and get your debt situation under control. Many times, people with an excessive amount of credit card debt get into a situation that repeats itself by using credit to purchase necessities such as groceries and gas because they are paying so much out in credit card debt every month.

When your debt to income ratio is too high, when you miss or are late with monthly payments or when you have had accounts go to collection, these things can all reflect negatively on your credit score. There are three major credit reporting bureaus that companies report to. They have a formula that determines your credit worthiness by giving you a score, which they report to anyone making an authorized inquiry on your behalf. Credit scores range from 300 being the lowest to 850 being the highest with scores falling about 680 being rated as good. To keep your score in the good range, it’s necessary to monitor your score as well as manage your credit card debt in the most responsible way possible.

You have the right to a free copy of your credit report from each of the three major reporters once a year. It is prudent to check your score periodically to make sure that there are not any errors on there that could result in you having a lower score. Companies make mistakes quite often that lead to people having negative reporting on their credit that they don’t even know about. When you find something in error, you should take immediate steps to fix the error to assure your report is accurate. Credit card debt errors in particular are common and should be addressed as soon as possible to make sure you are getting the score you deserve. You can contact the company that has reported in error to dispute any item you have found on your report and they legally have to respond to your request for review within thirty days.

If you are having difficulty getting a credit reporting agency to respond to your requests for investigation, there are companies that will work with you to get your credit repaired. Not only will they contact agencies on your behalf to get negative items removed, they can review what credit card debt you have and work with you to devise a plan to pay down the debt to a manageable size. They can also negotiate your credit card debt with companies on your behalf to remove some penalties or interest charges to make your payback more feasible in a shorter period of time.

Battle of the Stock Markets

AIM vs ISDX – But which stock market should SME’s choose?
AIM: The Champion

The success of The London Stock Exchanges AIM stock market is unquestionable. The market offers smaller growing companies a destination to raise funding, both at the time of flotation and though the further issues of shares once listed. Over 3,000 companies have joined AIM since it’s inception in 1995, and AIM currently wears the crown of most successful growth stock market in the world.

AIM offers companies all the benefits of being on a world renowned junior stock market and at the same time, the market is designed with smaller growing companies in mind. This means less red tape and fewer regulatory hoops than larger stock markets.

Companies joining the market do not require a trading history to meet the entry criteria of the market, and there is no restriction on the size or profitability which a company needs to achieve before joining AIM. The London Stock Exchange, who own and regulate AIM have made the market as accessible as possible for companies. However, few start up and pre-revenue businesses will be able to attract the investor interest required to float on AIM and undertake a fundraising, as AIM investors prefer to see companies with at least some trading history and existing revenue streams.

There is no minimum amount of shares that a company has to put on AIM at the time of flotation. However, the advisor and broker costs associated with joining AIM and undertaking a fundraising are not insignificant. You can learn more about floating on the AIM Stock Market online from many available sources.

ISDX: The Challenger

In 2006 came a worthy challenger to AIM. PLUS Markets Group run by AIM’s ex-boss Simon Brickles re-branded and re-vamped the existing OFEX stock market and created the PLUS-quoted stock market. PLUS-quoted had an even more flexible approach to the entry criteria, and offered a less expensive route for smaller companies to take their first step on a UK Stock Market.

PLUS-quoted reached an important milestone in 2007 when it was granted RIE (Recognised Investment Exchange) status, thus placing it on the same level as many other stock exchanges, including AIM.

In October 2012 PLUS-quoted stock market was taken over by ICAP the world’s leading interdealer broker. ISDX is currently the third largest stock market in the UK by number of companies, behind The London Stock Exchanges Main Market and AIM. ICAP the new owners of ISDX are set to grow the number of companies listing on the market in the months ahead. Learn more about floating on the ISDX there are many good sources available online.

The verdict

The average size of companies joining AIM has risen in recent years, and the costs of listing on AIM makes it less accessible for some the smaller companies.

ISDX, offers smaller companies a more accessible venue, with joining costs around a third of those for AIM. However, one of AIM’s key benefits is that it‘s a good market for companies to raise money on, particularly if they are acquisitive and requiring repeat fundraisings. ISDX on the other hand, currently remains predominantly a market for companies looking to raise under £3m. Therefore, for larger or repeat fundraisings, AIM remains the market of choice for companies.

Of course it is possible to use both stock markets, leveraging their own particular benefits. A number of companies have cut their teeth on PLUS (ISDX) and benefitted from the flexible regulation and low joining costs that the market offers, then moved to AIM when they require larger tranches of funding.

So for SME’s, both stock markets may have something to offer growing businesses looking for investment capital.

Is 2013 the year to invest in shares?

Investors are understandably looking closely at the Stock Markets as a home for their investments after the returns seen throughout 2012 and in the first weeks of 2013.

Whilst in the UK, attention has been drawn on the FTSE 100 index breaking through the 6,300 mark for the first time in four and a half years, across the Atlantic the US’s Dow Jones index also hit a five-year high last week.

It’s a brave investor that, in this economic climate increases their exposure to high risk stocks, such as AIM Stock Market companies, however there appears to be a segment of the investment community willing to do just that. There are indications, that some investors are selling income-focused funds which are regarded as a safer investment and turning to buying riskier stocks.

The recent Bull Run that we have seen over recent months may have given investors false hope. There is little doubt that investors that do not maintain a balance of risky and safe investments in their portfolios could end up with their fingers burnt in the coming months.

History is full of examples that demonstrate the down side of investors following short term trends. One of the most recent examples was in 1999, which was the height of the technology stock boom. In only a matter of weeks the sales of unit trusts increased by 33pc to £4.7bn. Investors bought £220m of technology funds only to see the technology sector come tumbling down once the dotcom bubble burst. We saw a similar situation in 2007 when property funds outsold funds investing in shares and bonds, only to see these funds suspended, as property prices crashed.

These examples demonstrate why a long term view of holding onto their safer defensive investments during bull markets makes a good deal of sense.

Although some of the more defensive funds have had a difficult 12 months, there is little doubt that if poor economic data continues to flow and the feared triple dip recession becomes a reality, and then it will be the safer defensive funds that will prop up riskier investor portfolios.