I am sometimes asked what is the secret to reading a market and the simple answer is that if I or anyone else knew we would all be multi-millionaires. Take the present share market on the London stock exchange. Some analysts feel that this is the time for rich pickings, others that the recent descent of it is the augur of a bear market so get out now whilst the going is relatively good. Take a company like Rolls Royce, which by its very name and nature denotes prestige and reliability, except it has issued 2 profit warnings this year and shareholders have lost significant value. A few years ago Tesco would have been the flagship of the retail sector – now there is talk of criminal investigation. RBS was a banker bank share before its well-documented problems.
Even the most respected of gurus like Warren Buffett make errors like investing sizeably in Tesco but his philosophy of retaining solid stocks has become a mantra.
In the end intuition is as reliable or not as any market analysis. I playeda round of golf at Wentworth the other day with dear John Partiger and said to him that punting on shares is not actually that different from his golf wagers and probably less fun.