Jennifer Hill and Jessica Bown
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Britain's blue-chip index plunged into a bear market this week, dropping more than 20% below its peak. The FTSE 100 index closed at 5,260 on Friday, its lowest level for three years and nearly 22% below a high of 6,732 hit in June last year.
With the property market collapsing and commodities at extreme levels, is there anywhere left to make money?
Many advisers have long recommended clients interested in art, fine wine and collectables put a token part of their portfolio in these areas. However, professionals and private investors are increasingly seeing the potential in alternative assets.
City “superwoman” Nicola Horlick plans to let clients invest in music rights in the belief the sector will beat the downturn, while Clem Chambers, chief executive of stocks and shares site ADVFN.com , has sold out of equities and into collectable coins.
Gary West of Port Funds, which runs the Wealth and Fine Wine fund, a fund of funds for investment-grade vintages, said: “We're in a bear market and the traditional equity funds which have always taken the core in any portfolio don’t have the right to have that place anymore.
“Alternatives are no longer the abstract 1%-2% of a portfolio; they’re fundamental — into the realms of a 20%-30% split across a mixture of non-correlated alternatives.”
Alternative assets tend to fare well in tough times. Looking back to 1950, the performance of fine wine peaked at 23% a year in the recession-hit 1970s, according to Wine Asset Managers.
The Wealth and Fine Wine fund, which became available to retail investors two months ago, returned 24.5% last year and West expects the sector to deliver annual returns of 20%-plus for the foreseeable future.
“It’s quite simple: as the years pass, the vintage years themselves get more valuable and the stock decreases,” he said.
“Asia is buying huge volumes of investment-grade wine, but they’re not storing it; they’re drinking it. That’ll have a tremendous, long-term effect on the wine market.”
The current economic downturn and boom in commodities mirrors the 1970s, said Chambers — a time when the “only place to hide” was coins and stamps.
“Coins are perfect safe havens because you can take them with you. They went through the roof in the 1970s and are starting to go through the roof now,” he said.
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Gold and silver should form a part of everyone's portfolio. Silver has averaged 30% for several years now. Both thrive in stagflationary times such as this. You can invest via shares in exchange traded funds (ETFs), bullion or in shares of related mining companies, including Blackrock's ISA fund.
Dave, Nottingham, england
I suggest joining a private trading club. I have and make money safely under the guidance of a very careful professional trader. Members of the club are making a healthy profit every week. You can still make money from the markets, you just need to know how.
Fran On, Shrewsbury, England
THERE IS NOWHERE LEFT TO MAKE MONEY!!!!
Did you think it would be any different in a Globalist Society? Global in essence means everywhere the same......................
Get your money into assets now ............................. of any type
YOU HAVE BEEN FAIRLY WARNED
R McAuley, Antrim, UK
the money will be made in 2 things, natural energy or recycled waste.
mike mckeary, paisley, scotland
And who's eventually going to buy all this fine wine off of you? I am reminded of the tale about the broker who persistently told his client to buy a stock with the effect that his clients demand made the stock rise; When the client decided to cash in and sell, the broker replied "sell? to whom?"
Eric Skelton, Cardiff, Wales
Having been 100% cash since September '07 I've recently started investing 10% of my cash in oil and exploration stocks (E&P) trading at or below net asset value (NAV). These are stupidly low valuations, being as the NAV calculations are done on conservative assumptions of oil at $70/barrel.
John, London, UK
So Chambers has sold out of equities. Does he recommend investors sell ADVFN shares as well?
Ron, Dunfermline, UK
I echo the words of Tim, Bristol.
pj, Denver, Colorado: The domain market is over as far as the main TLD's. When ICANN releases the new unlimited TLD's, then they may be a worthwhile investment but would be costly to maintain.
Remember: The only things guaranteed in life are: Life, death & taxes.
Jonathan Sklan-Willis, Manchester, England
Banks and mortgage lenders et. al. have investments in rubber plantations throughout S.E. Asia.
Michael, Aylesbury,
Clouds. I have my head in them.
As do many of the respondants to this article.
If 32% returns were genuine, feasible, in an enviromment with a trusted legal system and had a sensible level of risk, banks and building societies would buy them, not dreaming gamblers.
Tim, Bristol,
Rubber: I have an interest in a rubber plantation in Thailand that delivers a return on investment of 32% p.a.
Michael, Aylesbury,
well, if there's easy money to be made anymore, i've got a bridge to sell in minneapolis...
joe, beverly hills, not sure
Turning rubbish into a money making enterprise is the need of the future. The planet is one pollution nightmare, therefore there are thousands of opportunities awaiting anyone who can seize the moment and opportunity.
Jim Wills, Brisbane, Australia
Buy food with a long shelf life, its going up 20% a year at the moment, and if the currency collapses, at least you will have something to eat.
Mark Taylor, Cambridge, Cambridgeshire
I have seen some intersting non corellated funds and even more interesting the ethical investment market attracts a lot of interest rightfully in this time of ecological and enviromental awareness! I checked out the Port Funds website mentioned in the article above www.portfunds.com movie fund
Alex Davies, Northampton, United Kingdom
I recommend investing in domain names - there's a lot of money to be made by those that do their homework. Domain name aftermarket prices have also been effected by the downturn in the US economy which has produced some good buying opportunities.
pj, denver, colorado,
i have been told by my equity isa provider that i cant keep cash or buy cash funds in my isa any alternatives or thoughts please
stephen , leeds, england