Thursday, August 06, 2009

Silver And Gold

Some things...

The government announced that VAT receipts are behind forecasts but what the hell did they expect after the April budget?... "Tax receipts are some €575m, or 3%, behind that profile, mainly due to a shortfall of VAT (€448m behind)." Personally I'm down about €300 per month since then. Of course my (and everyone else's) discretionary spending was going to drop.

90% of the people who were in employment during the boom still are and, of those, it appears that about 40% of private sector workers have been forced to take a pay cut by their employer (through pay cuts but more so through reduced hours, reduced overtime and reduced bonuses; and 100% of public servants have taken an effective pay cut).

But people, being the lemmings they are, have also reversed their spendthrift ways and started saving. A lot. "Recent revisions to national accounts showed that the Irish household savings rate fell to 2.3% in 2007 (bar 2000, the lowest proportion of after-tax income ever saved). That rate has spiked to over 12% in 2009, equating to a massive withdrawal of spending from the economy. It has overshot and precautionary saving will eventually ease. Possible triggers for a reversal include the likelihood of smaller-than-feared tax hikes in December."

So, room for hope after all.

As for my shares the Eurostoxx50 have powered ahead to €26.83 - up 38% on what I bought them at, while MAN Group have been very volatile but are now trading at £2.78, plus I've banked a dividend of 15p per share, meaning a 48% improvement.

This market rally can't continue one would feel. A correction in September seems on the cards. I might cash in the lot in the coming weeks and wait for that correction.
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