Investors warned over US mortgage crisis

Investors have been warned about the impact of the United States subprime mortgage crisis on stocks on this stide of the Atlantic.

Belfast-based investment specialists Johnston Campbell urged caution because of the trans-Atlantic threat and called on investors to make sure they had well balanced portfolios in place.

Subprime mortgages are home loans made to US borrowers with poor credit histories and they are adversely affecting shares, according to Johnston Campbell.

Graham Glover, director of investment management, said investors should restrict exposure to the risk by making sure they do not put all their eggs in one basket.

A well diversified portfolio he said, might include bonds, money market funds and stocks of small, medium and large companies in a variety of industries and countries.

He added: “More cautious mixes of equities, bonds, property and cash are performing better than the stock market. The appetite for cash and fixed income has particularly soared in recent months, with the amount of high-interest yielding bank accounts currently on offer. This is a marked change to the last few years when more risky equity bets have paid off.”

Mr Glover said he did not envisage a stock market crash and cautioned against any panic selling of shares.

He added: “Although there is still some short term volatility to come, this is a time to be buying rather than selling. Investors need to see beyond the short term when it comes to equity investing.

“The key is balance. A balanced portfolio will outperform in the long run.”