Profiting from Investment Market Collapse

Profiting from Investment Market Collapse  – We advised our private clients several years ago to invest into the CF Odey Absolute Return Fund. Crispin Odey is a master of short selling, a process in which fund managers can profit from the collapse of value in stock markets around the globe. Although this is an Absolute Return Fund, it is run as a Hedge Fund, the performance has been extremely impressive. However the fund is now closed to new investors.  Indications from the market are that Odey funds have increased in value by around 10% since the start of the fall in the Chinese stock market. So if you hold CF Odey Absolute Return Fund you have done very well indeed.

We are also major advocates of Real Estate Investment Trusts (REIT) and our recent tip for our clients to buy into a REIT before the value of its assets exceed the net asset value of its investments, is looking good. Particularly as recent results from this REIT are particularly good and indicate a yield of 5% which will increase over the years ahead as all of its leases are inflation linked. We advised our private clients to get into this new REIT early and although they have been invested for two months or less AND the market has dropped – they are in profit by over 7%.

Given that we have now seen a general market collapse of around 10%, how should one play the market now – is it too early to invest into a volatile market?

  • The FTSE 100 closed the day at 6,194.10, an increase of 110.79 points.
  • The FTSE 250 grew by 201.51 points to finish at 17,087.24.
  • The FTSE All Share climbed by 56.18 points to 3,410.84.
  • The FTSE AIM All Share finished at 734.74, down by 4.28 points.

We would advise some caution the market collapse may not be over yet, so why not phase yourself into investments over a period of say six or seven months. It could be worth picking up investments with a good yield such as income unit trusts over that time period.

Although the Chinese government have been very clumsy in their triple devaluation of the Yuan, this may be simply a step they have taken in advance of loosening their money supply to create more domestic demand. If so, ultimately this may prove beneficial to investment markets.