A year-long companion for the investor
An old friend has just breezed through the door. The letter box actually. It's the 2013 edition of the UK Stock Market Almanac by Stephen Eckett. It consists of a diary I almost certainly won't use and data I never knew I needed.
I probably don't need the data either, but it is enthralling. For example, buried within the Almanac's hundreds of commentaries are sector profiles of the FTSE 100 and FTSE 250. Forty-three per-cent of the FTSE 100 is made up of three sectors: Oil and Gas Producers, Mining, and Banks. Just thinking about recent history and how cyclical those industries are makes me question whether these blue-chips are Britain's most stable, enduring companies.
Each week gets a double-page spread in the Almanac, the left page invariably contains seasonal analysis: the distribution of very large one-day market falls, tables showing how sectors have performed in the month, analysis of the performance of companies before and after they leave the FTSE 100, and which shares perform best in the worst months.
The right page is the diary. I doubt we're meant to write appointments in it. We probably use Outlook or Google these days, and there's little space. The daily diary slots are pre-filled with more calendar information, the expected dates for economic data like Monetary Policy Committee meetings, quirky historical events from the launch of Edison's first electricity plant in 1882 to the Personal Assets Trust thirty years ago, and past performance of the major world indices for that day, week and month. The bottom of each page lists the full-year and half-year announcements expected. Actually, that's not quite at the bottom. The Almanacist manages to squeeze in a quote beneath. Groucho Marx says: "The secret to life is honesty and fair dealing. If you can fake that, you've got it made."
The back of the book is a 65 page reference section containing, for example, a list of the eleven companies that have fallen more than 99% since the credit crunch but remain listed, and the 13 companies whose share price has increased more than 200%. Its a nasty reminder, a taste of humility. Dialight, which I looked at and rejected, is up 453%. There's a 319 year chart of the UK stock market going back to 1693, eight years before the seed drill was invented by Jethro Tull.
The chart puts things into perspective. It looks like the famous hockey-stick chart describing climate change, or demographic charts, and shows what extraordinary times we live in. The Almanac puts things in perspective too. Shell's market capitalisation today is 40% bigger than the entire FTSE 100 in its first year, 1984. For the price of gold to rise to its highest against the stock market the FTSE All-Share index would have to fall from 3042 to 699, or the price of gold quadruple, or a combination of the two. The almanac describes an ocean of currents, eddies, whirlpools and waterspouts and reminds me I'm a fisherman in a little dinghy, on a big wave, in a mighty sea.
Some investors will find this information more useful than others. The blog of the book tells us, that December and April are the best months on the stock market not only since 1693 but also since 1980. January is by far the best month for small-caps, February is good for miners, share prices have monthly momentum, an imminent ultimate death cross could be very bearish for the market. As a fundamental investor this information doesn't matter to me, but I defy you not to to pick up the Almanac, stumble on facts like these, and wonder. Why?
I almost forgot an essential component of any diary review. It might need a little persuading in January, but, lying flat on a desk it stays open on the current week.
About the author
Richard is companies editor of Interactive Investor and a columnist at Money Observer magazine. A keen private investor through his Self Invested Personal Pension, he manages two virtual portfolios. The Share Sleuth portfolio is a hand-picked collection of mostly small-cap value shares, while the Nifty Thrifty is a mechanical portfolio designed to pick large, successful companies at cheap prices.
- Richard Beddard on Share Sleuth's notepad: Continuously reducing risk
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Richard Beddard's tweets
- Any mechanical investor shld read: MT @Stockopedia: And this is just classic - Mining Fool's Gold - http://t.co/XnYbNXYzga — 1 week 19 hours ago
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