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  Market Update: July 15th, 2005


Dear Sirs & Madams,



Funds Update-


AHL has profited by over 7% during May & June which has resulted in good profits in all MAN Investments products US$, Euro and AU$. Forsyth funds struggled during May as confusion hit the hedge-fund market with the funds making a loss of 2.9%. Brandeaux funds continued to profit during May and June up around 1.7%. Gold funds moved higher during both months with a return of around 10%. 








LM Mortgage Income Fund





Brandeaux - Newsletter





Forsyth Alternative Fund





Forsyth Diversity Fund





MAN Investments USD-Euro





MAN Investments Au$




click on link

Merrill Lynch Gold & General Fund





Momentum All Weather Liquidity


0.6 +



Momentum Funds





PSG Global Hedge Fund





Royal Skandia GBP





Royal Skandia USD 





Royal Skandia EUR





Friends Provident Fund Range Performance





Zurich International Life Fund Performance Brochure







Buying property in Asia please click here.


Please click on the funds in the scoreboard to see the latest commentaries and performance. I have changed things slightly in order to reduce the email size and have listed a link below to click on, which will take you to the full report.


This month I outline the current state of play in the stock-markets, currencies, bonds and property and the forecast for the rest of the year. Please click here.




They appear now to be in a topping process which should then lead to declines across the globe. No stock-market is safe though some will move more than others. The latest from Weiss ratings suggests that 2nd quarter profits on the S&P500 will be lower than most think at 7-9%. This looks ok at first glance but delving a little further in to the numbers we see that if we take out the Oil companies, profits drop to 4.6% which changes the game somewhat at these high Price to Earnings levels. My view would be that the current inflation rate listed by central banks is below the real rate by a few points which then leaves us quite some way from Wall Streets expectations. Chinese stocks are at an 8 year low with no signs of real support which cautions me to the rest of Asia as they are now supported by both China and the US.


For the markets to jettison higher from the current PE ratios will make a mockery of the 100+ years  of market data, with this in mind I have listed the annual returns for stocks for the  following 10 years based on the starting level of the PE ratios, which may be quite surprising.



As markets are based around the PE ratios for growth terms I have shown below the PE ratio going back to 1901.




Based on this my view would be to take a position with a downside bias from here that does offer something on the upside should markets move higher.


Indicative levels for Nasdaq based 3 Year Investment


100% Capital Guaranteed




On the downside the product pays 100% of the downside between 100 and 78% of initial level - ie max payout is 122% at maturity.


On the upside the product pays 60% of the upside between 100 and 122% of initial level - ie a max payout of 113.2% at maturity.


Currently trying to build in an accelerated payment which should either barrier be broken 78% or 122% then the investment will close and payout the profits immediately.


Example: NASDAQ starting at 2000 drops to 1559 then investment closes and pays out profits of 22%


Example: NASDAQ starting level 2000 rises to 2441 then investment closes and pays out profits of 13.2%.


If you are interested in this please could you let me know, itís possible that a GBP version is available should there be interest. USD available but lower profit figures on the upside.



Bonds & Yields


Bonds remain the safe haven at this time and are managing to keep interest rates low.  One thing is for sure that the stock-market moves have not been followed by the selling of bonds which would be a sign of confidence. A number of the big bond managers have been purchasing bonds to secure these yields as their feeling is that rates will keep falling as investors search for any type of yield. They also believe the FED will be cutting interest rates towards the end of the year. Junk bonds are now falling as investors move to higher grade debt which suggests that the cycle of cheap credit is coming to an end.




Australia and Sydney in particular has dropped some -15-20% in parts with the current average around -7%. The UK property growth has stopped and is currently falling all be it a small 4-5%. The US is flying along with the first US$1.4million trailer for sale, a frenzy it is over there at the moment but homebuilders are slowing now and their stock charts appear to be topping. The overall picture I see from this is that the UK and Australia are far ahead of anywhere else when it comes to property and we can see this by taking a closer look at the UK. May consumer spending moved to negative growth for the first time since I canít remember closely followed in June by consumers starting to reduce their debt loads. This is one to watch as it takes a massive sentiment change to actually move these debt figures lower, one month doesnít make a summer so they say but this is a must follow for the next few months.




The USD looks to be heavily overbought and we should see a reaction of weakness over the coming weeks which should favour most currencies. GBP appears ready to bounce upwards but the Euro looks to be wobbling, I suppose they could do with some good news but no one seems to be to sure where this will come from.


Precious Metals


Gold popped up and then popped back down and currently sits in limbo in the 420ís, the next month or two could be choppy to down in mining stocks but should this happen this will complete the most bullish chart pattern there is in Technical Analysis and suggests that these stocks will be the top performers over the coming few years.  Silver has stopped at $7 which is the cost to mine so if you can buy something at cost price and it holds an inherent value then to me it seems like a good buy.




Hovering around the US$60 mark yet the reserves in the US are full which suggests that the price could be a little high at this time. A drop back to US$40ís looks possible prior to further rises as we approach the supply/demand problem if correct on growth levels in October/November. China seems to slowing which accounted for a good portion of the demand growth forecast.


Market Volatility has stayed low though is now picking up on a daily basis which suggests a trend change could be taking place.


I covered quite a lot this month and hope that you have time to read it. Any questions on anything please let me know and if the NASDAQ is of interest I would appreciate it if you could advise me as I will judge by investorís thoughts if we should move the allocation rates.



If you have any specific queries on any financial matter please let me know and I will do my best to help.


Kind Regards,

Gareth Cookson


Gareth Cookson
Director Sinclair James International

Tel. +632 889 6145
Fax. +632 889 6144
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