How to make money in a slowdown
Updated: 2008-02-27 23:21
"Now we're increasing exposures in higher risk portfolios where risk isn't such a consideration, because the returns relative to other asset classes will be good in 2008."
He urges investors to go for funds of hedge funds to reduce risk.
* Angus Campbell, head of sales at spread betting firm Capital Spreads, says "shorting" -- the practice of borrowing a security, such as a stock, selling it in the expectation its price will drop and repurchasing it to pocket the difference -- gives investors the ability to profit in bull or bear markets.
"It will be very difficult for the booming BRICs to keep the global economy afloat since a large amount of their success depends on the strength of America.
"So, if you think the markets are going to continue their downward move, it's just as easy to sell it as it is to buy it.
"Currently, our clients are bearish of the FTSE 100 with the majority of them having sold the index in the hope that it will continue to fall.
"If you don't like the thought of selling something you don't own in order to make a profit, then you would be best off keeping your money in cash."
* Rebecca O'Keeffe, head of fund management at Interactive Investor, advises risk-averse investors to consider gold or commodities more generally.
"While you can invest in gold directly, you can also invest more generally in a commodities fund.
"The BlackRock Merrill Lynch Gold and General fund is up 6 percent year to date, against a backdrop of global markets which are down around 7-8 percent.
"Also, against a backdrop of flat markets last year, global emerging markets returned 25 percent and they may well benefit this year from the money that is likely to be withdrawn from Western markets."
Jim Wood-Smith, head of research at private client fund manager Williams de Broe, believes there will be a sharp rise in the popularity of "wet funds", as global water shortages begin to take hold, new openings in advertising (due to expanding online social networks, video-on-demand and mobile phone advertising), and continued rapid growth in Asian emerging markets, all of which will produce investment opportunities.
"The messages for 2008 are selection and effective diversification," he says. "The gulf between the winners and losers will widen, for both asset allocation and stock-picking."
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