FTSE Enters Bear Market...

Officially, we’re in a bear market if the index falls more than 20% below its peak. Yesterday afternoon, the FTSE reached that point. It closed a little higher, meaning the bear market hasn’t officially started yet. But it’s only a matter of time...

So this morning, I cornered our research director, Theo. I wanted to know if he thought staying out of stocks completely is the best way to go. "There’s certainly a lot of pain in store for shareholders," say Theo. "Growth, both economic growth and earnings growth, isn’t going to be favourable to the FTSE. But there will be companies that offer protection. Companies that continue to be profitable, especially those that operate in foreign markets which are still growing."

Theo’s looking at the FTSE on a stock-by-stock basis.

"The important thing to remember is that you’re not buying the index," he says. "You want to identify those shares that will buck the trend. Easier said than done... but I’m looking at some really exciting companies right now."

One of the companies Theo’s looking at appears on this year’s Goldman Sachs conviction list of 20 companies the investment bank is bullish on.

Theo is putting together a report on this company, together with two other investments he believes will perform even in the sticky patch up ahead. On Monday I’ll tell you how you can get your copy...

Stay tuned!

Another stain on an increasingly damaged reputation...

"This is another nasty episode in the life of the City," writes Tom Bulford. "Another instance where the word of investors has not proved to be their bond; another instance in which the interests of private investors have been trampled upon with utter disregard; and another stain on the increasingly damaged reputation of AIM."

The Alternative Investment Market (AIM) can be a highly profitable place to invest. But it can also treat you like dirt if you don’t have your wits about you. Sadly, this has been the experience of shareholders in one small company this week.

Tom suspects there’s something underhand going on here... fund managers, having lost millions of their investors’ money, are blaming anyone and everyone of anything and everything. Rather than just admit they made a mistake...

Profiting from oil’s "5-year bottleneck" China Oilfield Services, which is the listed entity of the China National Offshore Oil Corporation (CNOOC), is to buy Norway's Awilco Offshore for around $2.49bn.

Colleague Garry White calls this "a very savvy move". You see, with the price of oil at record highs, there’s a real incentive for producers to get their hands on the stuff. But there’s also a problem. Not enough oil rigs.

"There are currently 21 drill ships under construction that can drill in water up to 12,500 feet deep," says Garry. "And all but three of them have already been contracted for an average of about five years."

The ongoing rig shortage is a factor that will impinge on the supply of oil. Which, of course, is great news for Garry’s oil portfolio...

How to stage an investment coup — without firing a shot

Simon Mann was sentenced to 34 years this week for his part in the attempted coup in Equatorial Guinea (the one that rally driver and navigator extraordinaire Mark Thatcher was mixed up in).

Profit Hunter’s Manraaj Singh has followed the story with interest. Because he has two shares in his portfolio that allow him to benefit from the very resources Mann and co were willing to risk life and limb for.

Find out how you can stage your very own ‘investment coup’ — without having to overthrow an African government to do it.

Until tomorrow

Ben Traynor

Today’s Daily Reckoning — Who wants to lend? And who wants to borrow?

The war continues. The unstoppable forces of inflation continue to smash into the immoveable lines of deflation. Caught between the two is the US consumer...the American voter...and the lumpeninvestoriat.

Yes, dear reader, we are getting shot to pieces from both directions. Prices are rising. And prices are falling. Mr. Market marks down prices for housing and stocks. Mr. Federal Reserve System pushes up prices for oil and food.

Yesterday brought more hits, more near misses, and more casualties from "friendly fire." But the big story was that after so many weeks of reporting huge gains by inflation, deflation is back in the news with a major counteroffensive. It had begun to look as though inflation was the clear victor. Prices are rising everywhere; everyone came to believe inflation was unbeatable. Analysts had begun talking about oil at $170...even $200.

You can read today’s Daily Reckoning in full HERE.

P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.

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