Tuesday, 19 March 2013

It's done

Sell, sell, sell

I did sell everything. I sold as soon as the market opened. If I had waited I could have done better because the market recovered significantly. It had weakened again by the end of the day but never fell to the levels reached overnight.

So what has happened? The markets were spooked overnight by the Cyprus news. But once they had recovered from the shock, they decided to ignore the news and mostly returned to their previous levels.

So was I wrong to pull out? My reason for pulling out had nothing to do with Cyprus. I had made my decision on Friday based on the volume spike in US stock market trading. I was unlucky that the Cyprus news came out because it pushed down the prices at which I could sell.

My thinking was this:

  • big spikes in trade usually signal a change in direction for the market
  • the market has had a very strong run upwards and at the very least it is due for a pull back
  • I have a decent profit which I can take now or I can leave it in the market and risk losing it
  • the odds have shortened significantly and I don't want to the wrong side of those odds
The effect of the spike sometimes takes several days to show itself so I'm back to waiting to see what happens next.

What's a Cypriot urn?

I am not nearly so sanguine as are the markets about the news from Cyprus. I suspect dirty work is afoot and that danger lies ahead. I suspect that the European authorities have a hand in what has happened. 

Here's my scenario:

Banks in several Euro area countries are at serious risk of failing because they have lent money to customers who do not have the means to repay. At present there is a promise to depositors to protect a large part of their money if their banks default. What happens if the funds needed to fulfill that promise are inadequate? Oh dear! we never thought of that.

Now if the authorities could snatch some of the bank customers money that might help to plug the gap. A 10% drop in the value of depositors funds would create an immediate equivalent improvement in the banks' balance sheets. Bingo! 

But what would the political repercussions if we did? Would people take it lying down? "Just another tax!" Or would they kick up a fuss? "The government can put its hand in my pocket any time and grab my money? I'm not having that!"

Here's a thought. Cyprus is a tiny part of the Euro area quite far away from the mainstream. Let's try it there and see what happens. At least we will learn something and know what we will have to deal with when we try it in Spain or Italy.

It is quite a long stretch confiscation of savings in Cyprus to the same thing happening here. But you'd be surprised at how quickly new ideas like that can catch on. Governments are like sheep. Especially if there's an opportunity to fleece their subjects. (Pardon the pun).

Golden opportunity

Selling shares means I have lots of cash and now I know that cash is vulnerable once more. So I have turned to that hoary old faithful of times of trouble: gold. It has not done very well of late but the price now looks attractive.

I have bought through an exchange traded fund (code SGBS) which stores its/my gold bars in a vault in Switzerland. The Swiss are not nearly as reliable as they used to be but it should still be harder for the authorities to grab assets which are lodged there.

Only time will tell if my run for cover was necessary but at least my profits are safe for the moment. As I have to keep reminding myself, this is my sole source of income. I have to get it right.

Pastry making

I had an unlooked for introduction to pastry making the other day. I had planned to make a tomato and cheese tart but when I unwrapped the pre-rolled pastry I found it had gone mouldy. Sunday evening, shops shut. I had to go for a pastry recipe which worked out fairly well. More of fairly in a moment.

I took 200 gms of plain flour, 100gms of butter and mixed them together in a food processor. I added about 50 gms of grated cheddar and a large egg and mixed this all together with my hands, wrapped the mixture in cling film and put it in the fridge. It felt a bit dry so next time I shall try two small eggs instead.

I chopped two peppers (one green one red because that's what I had in the fridge) and large red onion. I fried these very gently in 1 tbs of olive oil, for ages. I halved 250 gms of baby plum tomatoes, and about 20 pitted black olives and sliced two large tomatoes. 

By this time it was time to take the pastry mix out of the fridge. It was rather dry and tended to break up as I rolled it out. I was right about it being too dry. I patched the tears and managed line an oiled pie dish with a push out bottom. I was glad I had not decided to make a quiche because the mixture would have leaked through the pastry and made a terrible mess.

I baked it blind with baking beans on grease-proof paper at 180 degrees for about 15 mins and then for a further 5 mins without the beans. I then spread the base with whole grain mustard added a layer of grated gruyere and cheddar mixed, and then the onion and pepper mix, and the plum tomatoes followed by the sliced tomatoes and olives and some capers. The whole went back in the oven at about 200 degrees for a further 20 mins. It was a major success despite the less than perfect pastry which, it has to be said, was tasty despite being aesthetically challenged. I shall not be frighted of making pastry in future.

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