Tuesday's Markets

FTSE 100 5733.67 - -8.85
Dax 6527.21 + 10.58
Cac 40 3832.71 - -1.79
Dow Jones 11143.69 + 80.91
Nasdaq 2480.66 + 11.89
BBC Global 30 5433.97 + 8.88

Today's Markets

FTSE 100	5766.29	+	18.94
Dax	6482.57	+	48.05
Cac 40	3843.55	+	15.21
Dow Jones	11096.08	+	75.68
Nasdaq	2441.23	+	23.31
BBC Global 30	5410.78	-	-3.36

Day 1

Today is an exciting day for Reeves Independent as Nigel Reeves launches the Reeves Independent Training Academy. Students from the cities top universities have been invited to partake in a training scheme that will give them experienced and skilled expertise in sales/marketing and business.

The students are currently in our board meeting listening to Nigel talk about who we are, what we do and what we want to achieve. Nigel is then going to talk the students through basic sales techniques concentrating initially on "how to approach a potential lead" and then concluding with "identifying a lead" and "qualifying a lead".

All of the students will be given a chance to test their skills on our promotion stands in the upcoming weeks and today have been informed that they can earn up to £240 for six hours work.

We have students from Ireland, Spain and Latvia attending today and we wish them all the very best of luck and success in their future in sales.

Quote Of The Day 12/09/10

Determine the thing that can and shall be done, and then we shall find the way.

Abrahim Lincoln

Todays Markets

FTSE 100 5731.49 + 69.9
Dax 6396.28 + 91.71
Cac 40 3803.08 + 54.22
Dow Jones 11020.4 + 10.06
Nasdaq 2417.92 + 15.59
BBC Global 30 5411.99 + 17.28

The Fundamental Principles of Investing

Whilst some of what follows may seem obvious to many, the essential principles of investing are often forgotten or poorly understood, but it is vital that they are considered and comprehended, because they are fundamental to the questions all investors should not only ask, but more importantly, have answered before making an investment of any kind.

Particularly important questions and issues are:

'Should I be investing at all?'
'What are my investment objectives?'
'Is it financially worthwhile for me to invest?'


Our view is that it is impossible to answer the first two of these questions if you do not have a roadmap charting your financial journey through life to your desired destination - or in other words, a proper financial plan.

This is because only by going through the rigours of the full financial planning process will you or your advisers be in a position to make considered, informed decisions about such important matters as whether an investment portfolio is appropriate for you and what level of return you require in order to help you to achieve your financial and life goals.

In considering the answer to the third question, however, it would be worthwhile revisiting a few of the basic features of the capitalist society in which we live:

When you deposit your money with a Bank, Building Society or Government, you are essentially providing them with capital that they can use to finance or expand their wider business or Governmental activities. In exchange for this deposit of capital, you will be offered a relatively low return in the form of interest payments, but with a comforting guarantee that the nominal value of your money will not fall.

However, even though the nominal value of your money will be protected if you choose to only hold cash deposits, you must keep in mind that the real value of your money may well be eroded over time by the pernicious effects of inflation, if you choose to pursue a cash-only investment strategy. Indeed, as we always remind our clients, it is all too easy to underestimate the negative power of inflation or assume that because you can't 'see or feel' it happening, it doesn't exist. Inflation has real consequences and must be taken seriously.



When you invest your money in the shares of companies (equities), you are also providing those companies with capital that they can use to finance or expand their business activities. In exchange for this input of capital, they will try to provide you with a relatively high return in the form of a growth in the value of your capital and usually dividend income as well.


However, the companies in question cannot guarantee that you will receive any dividend income payments, nor can they guarantee that the nominal value of your money will not fall and this uncertainty means that there is an inherent and sometimes discomforting risk involved in offering your capital to companies.


Despite this, there is an observed and accepted phenomenon, supported by a mass of research and data, that over the longer term the returns from equities are considerably greater than those from all other asset classes and importantly, the returns are also significantly greater than the long-term rate of inflation.


This increased long-term return from equities is known as the 'equity premium' - i.e. the greater reward delivered to an investor in exchange for their willingness to take a greater level of risk with their capital, by providing it to companies through the purchase of their shares.

To summarise, with investing as in all other aspects of life, it is essential that investors accept there is no such thing as a 'free lunch', whereby the high returns and inflation-beating capabilities of equities can be accessed by taking the low risk associated with cash deposits.

At Reeves Independent, our one aim is to help achieve your goal. Whether you want to go down the slow and steady route or if you would prefer to enter into some high risk investments, the decision is on you. We don’t want to make a quick buck from you and we would like to enter a long term business relationship that will see you benefit from our 20 years experience and trained expertise.

Asset Allocation & Diversification

Broadly speaking, there are four main asset classes into which one can invest: Cash, Fixed Interest Securities, Property and Equities, although there are many additional sub-divisions within each class.

Each asset class has different characteristics, an expected risk and return profile and performs an alternative but essential function in a well constructed and diversified overall investment strategy.


As such, the importance of appropriate asset allocation and diversification across and within asset classes cannot be underestimated, as it is crucial to the reduction of overall investment risk and volatility, through the combination of asset classes and their sub-divisions which are said to have a 'negative correlation' to one another - that is, they don't follow each other's market movements closely and in fact, may tend to move in opposite directions.


Put simply, this means that if one asset class or sub-division thereof is performing poorly at a given time, another should be performing better and thus your overall return should be smoother than if your portfolio contained only the one asset class. To use a popular expression, it is the investment equivalent of 'not putting all of your eggs in one basket'.


To give a practical example of the value of diversification, in this case within an individual asset class, in the very difficult market conditions we all experienced between September 2008 and March 2009, an equity portfolio which was comprised of the constituents of, say, the FTSE 100 index, would have suffered a fall in value of around 40% at its lowest point. In contrast, an equity portfolio which was comprised of only banking stocks would have suffered a fall in value of around 90%, so it is clear that diversification is critical.


Perhaps the clearest benefit of combining asset classes correctly, however, is that academic research tells us that this is the single most important factor in determining long-term investment performance, with over 90% of returns being generated through suitable asset allocation and less than 5% coming from fund and stock selection - despite active investment managers' and stockbrokers' misplaced belief to the contrary.


For these reasons, a key aspect of the Reeves investment process involves working with you to establish the ideal asset balance for your portfolio, in order to help you to obtain your desired investment returns in accordance with your personal circumstances, objectives and risk profile.