Smart Investor: don't get caught out by Osborne's cuts

Or in times of uncertainty - go for gold / silver etc

"Indeed there are simply too many known unknowns to call the future and so smart investors should ....proceed to move slowly, taking positions in good quality businesses when the share price offers good value".

Score: 9/10 for the bleeping obvious

Gold will crash. It is a bubble and all bubbles burst. The gold price might continue to rise for now but the crash just like the oil crash 2 years ago will happen. It is a question of when not if.

Gold is only attractive because it is going up in value and the graphs say buy not because value is being added or the commodity is getting rear. The graphs always struggle to predict a crash but common sense does!

The cuts could well see further opportunities to outsource so I don't see why companies like Capita are necessarily losers. They also tend to have watertight contracts so are not the first option when looking for savings at a mico-level. Similarly property co's like Wichford with a high public sector occupancy have deals lined-up for the longer-term and pay good dividends when interest rates are still low. .... soI think that this article is a bit simplistic.

Gold has become a very very crowded trade and will unwind explosively as dollar shorting comes to an end. I amy be wrong but I feel the US will come out of recession faster than most suspect signalling an end easing and hence triggering a rally in the dollar. The gyrations we have seen over the last couple of days alone should provide an indication just how sweaty palmed the commodity/dollar stunters are. The cinema is full and the door are locked- somebody is bound to shout " FIRE" very soon now. The result will carnage for commodities and bonds.

A good article, thank you for the effort.

hard to know what to invest in when so many are unemployed - is there and ETF for the dole

Most people don't have the time or the knowledge to select the best companies to invest in, never mind getting the timing right. My (lay) advice for retail investors is to find one stellar fund in each sector that's doing well and trust the fund manager to do a good job. Hence gold shares are doing brilliantly (check out Blackrock's Gold and General) but will need watching as it will nose-dive once the gold price looks like it's coming off heat. The BRIC funds are doing well (check out Allianz RCM's BRIC Stars) and although arguments abound about Japan's future, it's fantastically cheap and fundamentally sound - so should revert to the mean over the long term, so perhaps a good one for your pension so long as you're not retiring in the next 5 years. Check out the investment trust BGS for smaller companies that should recover faster. Other than that, investing in quality global companies that provide high dividends will help protect against dips in the share price. These seem to be unreasonably cheap at present so as well as returning around 5% in dividends (a lot better than cash) should also appreciate in value. Funds like Newton's Higher Income is focused mainly on UK companies like this, or Invesco Perpetual's Global Income is similar but perhaps with more capital growth potential, due to BRIC exposure, albeit with a lower dividend yield.

I agree with the principle of 'moving slowly' into the market. But what is appropriate timing? I sold almost 100% out to cash when the market was around the 6300 mark and have been buying back in at around 10% of my assets roughly each month for the last 6 months or so. I've spread my investment across the sectors mentioned above. So I missed the bottom of the FTSE completely, but am so far still buying back more than I sold, for the same money. Am I going at the right pace? I could have done better if I'd bought more, faster, when the FTSE was around the 4,000 point. But that's with the benefit of hindsight. And only 15-20% or so of my investments are going into UK firms anyway so it's not a big problem. Am I doing the right thing? Who knows. If we get the market correction that some are predicting, I hope it comes soon, while I still have around 50% in cash so can buy more cheaply. If markets get a huge boost from QE 2, then I might end up buying at higher prices than I sold at and then it might crash back. Or I might hang on for a correction that doesn't come and prices will race away from me. It's pot luck really. Again, my advice is keep it simple, back sectors not companies (let the fund managers do that even if they do charge 1.5% for the privilege, good ones are worth it), choose just a few, so you can keep them all in your head at once and react instinctively when conditions change and, as the article suggested, buy into the market a bit at a time. You'll never get it dead right, but you should do OK. Good luck.

Agree completely with this article - I haven't got the foggiest idea either.

Constance Blackwell,

I haven't heard of an ETF for the dole but you might want to consider pawnbrokers and bankruptcy specialists, although I don't know if they are good value at the moment.

Dear Editor

I am writing to thank you for the excellent ideas and advice being given in this correspondence. Please carry on.......

Great article. I never flee from one into another type of investment in total but prefer a spread.

Cash - enough for short to medium term needs, includes also cheap credit.

Equities - I tend to buy quality and hold for divis that build up cash that can be either spent on fun things, or essentials or re-invested. Blue Chips, FTSE top 10 (Whoops BP but I got them cheapo when Wedgie Benn was it, sold it off - remember that?

Property - Wow long live 0.0%, 0.78% even 2.5% a.p.r trackers. Not really just luck as I did a macro economic review and deduced correctly that we would follow Japan with years of low interest rates. Having paid off my mortgage and saved some cash I was able to move into property at the right time and price. I even got discounts as I bought only new even at the height of the boom and never ever bought expensive Shitty Centre Flats in huge blocks. This was done as a need to develop new cash flow after my ELAS boo boo - see below.

Only boo boo was my WPA ELAS pension, and Whoopee seems we will get some compensation - ta Georgie Boy shall now be able (2011 is it really, really coming?) and be able to upgrade the SuperYacht and get the moat cleaned.....maybe even change the amante!

Gold so high it must be heading for a fall.

Diamonds on the other had could show continued good growth and a fairly safe home for some spare cash to avoid the potential loss by holding too much of same.