Forget St Leger’s Day – still best to stay away

 
Ross Westgate
A COUPLE of weeks ago, I tweeted that there were now two new ways of earning $1m: capture Colonel Gaddafi and collect the bounty, or play CNBC’s new million dollar portfolio game.

Despite the fact that the fantasy portfolio game requires nothing but time – with no risk attached – I got a number of replies suggesting it would be easier to catch the Libyan dictator than successively trade these volatile markets.

The FTSE 100 hit its 2011 closing low on 10 August, just above 5,000. Since then it has rallied but we have just had our first weekly lost for the past three weeks.

On Wednesday we were up three per cent, then on Friday down 2.3 per cent. It isn’t just stocks: bonds, gold and currencies have all been “bobbing around like corks!”, in the words of market commentator David Buick.

This year, selling in May and going away would have saved you a lot heartache and money. Since 1 May, the FTSE 100 is down around 13 per cent.

Of course, the day for re-entering the market is the St Leger Day horse race, which was on Saturday (Masked Marvel was the winner). The question is: should you re-enter today?

Masked Marvel won at 15/2 against but it would very much be odds on for more volatility. There are still just too many variables, too many event risks, many with large political elements.

Today, for example, we get the final report from the Independent Commission on Banking but we still can’t be completely sure how the coalition government will react. The director general of the CBI John Cridland has described plans to implement the proposals quickly as “barking mad” – but how will George Osborne handle things?

Compared to risks from the ongoing Eurozone crisis, the impact from the ICB is small beer. There is such a cacophony of voices and opinions surrounding this debate, that it has become a fertile ground for rumour, misinformation and denial, all guaranteed to weigh on nerves. This week is unlikely to provide any breathing space.

There are Treasury bill and bond auctions for Italy and a debt auction for Spain. Greece muddles along, patently unable to meet the terms of its bailout package and unclear about progress on the debt swap programme.

Meanwhile, the resignation of the ECB’s Jurgen Stark suggests mounting German resistance to more bailouts, adding even more pressure on the German chancellor Angela Merkel.

So it is hardly an auspicious time to think about reinvesting. History suggests September is one of the worst months for performance, and it would be a brave person to take it on. Still you could always test your mettle first in the CNBC competition.

• Ross Westgate is co-anchor of CNBC’s Worldwide Exchange. Follow him on Twitter @rosswestgate. Play the CNBC million dollar game at milliondollar.cnbc.com