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Written by Equilibrium Investment Manager, Mike Deverell for Citywire. To see original article click here (log-in needed).

Despite the recent market setback, we remain very much in an equity bull market.

However, this feels like the strangest bull market in memory. When first I sat down to write this article just over a week ago, I wrote the following:

‘With stockmarkets around the world getting close to or surpassing their record highs, the over-riding feeling amongst many investors appears to be not excitement, but disbelief. Investors seem to be waiting for the next setback.’

We all know that risk and return are intertwined.

It is our job to weigh up the risks of any particular investment against the potential returns. This can often be quite a tricky business.

Outgoing Bank of England Governor, Mervyn King, offered some unusual news for Britain’s economy when he presented his last ever set of economic forecasts before leaving after more than twenty years at the Bank. King has had to wait more than 5 years, but the BoE Governor looked happy on Wednesday to finally have better economic news to communicate.

There has been a lot of debate recently about how best the UK should address its debt problem.

Some believe that cutting spending is the answer whilst others believe we should keep spending higher to engineer economic growth. I recently blogged about the current controversy over the Reinhart & Rogoff study into debt and growth and how this has reignited the austerity debate.

Regardless of your political persuasion, one thing we can all agree on is that governments should always spend their money carefully and ensure our taxes are not wasted.

The coalition government has recently spent a lot of time reforming the benefit system. It is therefore worth exploring exactly how much we spend on benefits each year......

Japan’s central bank, the Bank of Japan (BoJ), is the latest major central bank to engage in quantitative easing in an effort to stimulate growth in the economy.  But is this the only consequence?

 Quantitative easing from Japan is just the first of three ‘arrows’ in ‘Abenomics’.  That is the approach of the Japanese Prime Minister Shinzo Abe, to ending an extended period of low growth and deflation in the world’s third largest economies.

Currency is often an under-appreciated risk factor in portfolio construction.

For example, from 1 November 2012 to 15 April 2013 the Nikkei 225 Index in Japan rose by 48.38% assuming income was reinvested. However, over the same period the yen has fallen 13.77% against the pound. This means that a UK investor will ‘only’ have made 27.96% had they tracked the Nikkei and not hedged their currency exposure.

Of course, currency movements can work in the other direction. Over the same period, the S&P 500 is up 9.58% in dollar terms. However, a UK investor would have made a total return of 15.51% due to the strengthening dollar compared to the pound.

So how should you take into account currency when making investment decisions? Can you actually forecast currency movements and how do you mitigate currency risk?

(TAKEN FROM CITYWIRE WEBSITE: http://www.citywire.co.uk/money/how-to-protect-your-investments-from-currency-risk/a674018/2?ref=citywire-money-latest-news-list)

If you have glanced at the financial press in the past week you may have read that the findings of a high profile economic paper are being disputed.

Two prominent economists, Carmen Reinhart and Ken Rogoff (R&R) have been shown to have made some serious miscalculations in their seminal work “This Time It’s Different”. So far, so dull, you may say! Stick with me - this gets more interesting.

- Stamp duty abolished on AIM shares and other growth markets. Good news for more speculative investments. ... >> Comments (0)

One consistently recurring topic with clients and in the press is whether bonds are in a “bubble”.

In a recent article by Daily Telegraph Money’s Ian Cowie, he explained that he is so worried about a bond bubble that he has sold all bonds within his pension, switching it 100% to equities. So is he right to be worried?

The UK’s loss of its AAA rating has come as no surprise. It has been well flagged by both the ratings agencies, and frankly most investors could not understand why we still had this rating, the USA and France having already been downgraded.

With equity markets reaching levels not seen since 2007, all of a sudden we have some clients queuing up to give us additional money to invest!

Taken from Equilibrium Investment Manager Mike Deverell's Citywire Article on February 11.

“Be fearful when others are greedy and greedy when others are fearful.”

This quote from Warren Buffett sums up the contrarian approach to investing. To ensure you buy low and sell high, you must think about buying when others are selling and selling when they’re buying.

Markets are generally at their lowest when sentiment is at its worst. By contrast, they peak when sentiment is at its highest. Market sentiment appears to be verging on the euphoric right now. This makes me worry.

It’s always nice when we receive positive feedback from our clients.

We’re really proud of the reviews that have been posted on The Disc Directory, an independent review site. Thanks to everyone who has filled in comment cards and given us an average rating of 5 stars from 51 reviews!

Manchester based company, Mojo Your Business is launching its “Britain’s Got Mojo” event, which has been developed to encourage people, from graduates to those nearing retirement, to grow their entrepreneurial mind-set to drive change, adapt to the new interconnected world of work and create one’s own opportunities.

A few years ago, the Government appointed the “Office of Tax Simplification” to review the UK’s tax structure and make recommendations to simplify the system.  However, despite the findings of the review, things have continued to get more and more complex.  One of the recommendations was for income tax and National Insurance to be merged as, whilst they carry different names, they are exactly the same tax.

 Did you know that HMRC has a specialist “affluent unit”?  This department currently employs 200 inspectors to identify areas where wealthy individuals may not be paying their full dues...

Occasionally clients contact us having been targeted by firms offering investment opportunities via an unsolicited telephone call. ... >> Comments (0)