Investors profit on volatile markets

THE roller-coaster ride on equity markets is providing shrewd investors with numerous opportunities to make profits of close to 20% in a matter of weeks.

On Wednesday the ISEQ Index of Irish shares dropped by 0.96%, on Thursday it shot up by 1.27%, adding €727m to the value of shares but yesterday shares fell by 0.82%, eliminating €471m of the previous day’s gains and this has been the pattern for a number of weeks.

Real profits are being made in the see-saw market and Bloxham Stockbrokers in particular are very optimistic about investment opportunities in equities. Their latest suite of wealth management products launched last month is making good initial gains.

Bloxham’s recently-appointed head of investment strategy Pramit Ghose said he strongly believes that equity market indices will post modest returns going forward, but that skilled stock picking will be able to generate stronger returns.

Bloxham’s Contrarian Style seeks to take advantage of volatility in blue chip stocks which are experiencing wide price variations in relatively short time periods as investors react sharply to good and bad news flow.

“The current volatility in markets gives us the opportunity to buy good quality stocks at unusually low prices and to make short-term returns of 15-20%. For example, we bought Rolls Royce for £1.02 in the middle of October and sold it less than three week’s later for £1.21. We also bought AOL Time Warner at $12.25 prior to the release of the new Lord of the Rings and Harry Potter movies, and sold for $15.83 a few week’s later.”

Mt Ghose says timing is everything with this style of investment and so far Mr Ghose said looks as though Bloxhams is getting it right.

“In the first month of investing, the Contrarian fund had a return of 5.9% while the FTSE World Index grew by less than 1%,” he points out.

The momentum built up during the past week faded away as investors sold out of heavyweight tobacco, oil and telecom stocks.

Yesterday, telecoms fell back after strong gains this week with BT down 5.75p at 212.75p and mmO2 easing 0.25p at 54.75p.

The Footsie crossed the 4200 barrier in the first hour, which would have been its highest close since September 11 more than two months ago.

In Paris, shares closed slightly higher as a late surge from France Telecom pulled the index out of the red and as a benign opening on US indices coaxed other stocks into positive territory after a day of precautionary pre-weekend profit-taking, dealers reported yesterday.

Thirteen of the 17 western European benchmarks rose yesterday. France’s CAC-40 closed up 15.61 or 0.47% at 3,305.78. Germany’s DAX added 0.02%.