It’s your call.jpg

It’s your call

By Raoul Ruiz Martinez [email protected]

Raoul Ruiz Martinez is a resident financial consultant for Finesco Financial Services Ltd., Glasgow. Finesco Financial Services Ltd is authorised and regulated by the Financial Services Authority (FSA).

Recently a group of Christians made public their opinion that the world was to move towards Armageddon by May 21, 2011.

“The Rapture”, as it was termed, failed to shake us globally and passed with very little inconvenience to all. 

According to newspapers, these types of negative messages normally gain in voices when there is instability and insecurity in the world.

So what’s new? Are you reading this article bemoaning your politicians, governments and the financial communities? Is it Armageddon, the Bogeyman or financial risk that keeps you wake at night? What are you afraid of?

If finances are your night terror then understanding your own individual risk profile is the first step to a sleep filled night.

The information super highway was in the past a knowledgeable source to use with ease and confidence.

However, we are now in a time of perhaps information overload. It is becoming increasingly difficult to navigate through what often appears to be a cloudy view strewn with irrational comment to fact or an educated opinion.

No wonder there are many who are still keeping their investments in cash under the bed.

So I say cut through the nonsense to see it for what it is.

One example is even within a negatively lingering environment such as that of the European Sovereign Debt Crisis, all the while in Germany rising employment, stronger consumer demand and improving economic growth are performing very nicely indeed.

The German economy grew by a record 3.6% last year; exports surged to the highest monthly value in history last month. So, as you can see, data showing steady economic expansion may not grab headlines in quite the way that emergency bailouts do.

It is not at all surprising that Germany and France remain powerhouses in terms of their overall economic production (GDP), followed by Italy and then Spain (although, again, the prophets of doom have returned to recite their usual mantras on these two as the next in line for a bailout).

Factually, Greece, Ireland and Portugal all hold similar GDP levels and are proving to live up to their plight in both an economic and geographical sense as being “peripheral”.

Inflation is another example where there appears to be a lot of confusion. In the eurozone it has continued to climb (the annual rate of inflation edged up to 2.8% in April from 2.7% in March).

It has to be said that some prices are stagnating and others are still falling but with Germany dominating fiscal policy in Europe to this day within the heart of the ECB, further interest-rate hikes seem likely.

However, what would rate rises at this juncture mean for the European market? A popular line of thinking is that an economy will underperform if interest rates continue to rise although the actual performance of the European market for 2011 so far paints a different picture.

Even as inflation and interest rates have risen, Europe has significantly outperformed other developed markets.

So, while equities can perform poorly at the start of periods of monetary tightening, in fact their performance improves as investors adjust to the initial shock of higher borrowing costs.

Let’s be honest here, in this quick assessment of Europe I think that an Armageddon-style collapse is avoidable.

All the while news will instil messages of doom; there are still opportunities that you can access and the world is a very small place but can provide great diversity and balance to your investment needs. So, as you lie in bed at night as fear takes a hold of you (you may even switch on the TV to check if the world has ended or switch on the light to make sure the fables of the bogeyman are just fables), take it all in and just think again. “Who is creating this fear?”

Natural and rational logic would conclude that it is only you to blame. Only then can you say it is all over and start living rather than dwelling in an enclosed world of apprehension.

This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investments or course of action. 

Raoul has a regular feature (Raoul’s Rant) on the Owen Gee Solid Gold Sunday morning show on KissFM Algarve every 2-3 weeks with the next show on June 5. He can be contacted at the offices of euroFINESCOs.a. either by telephone on 289 561 333 or on email [email protected].