Chief Editor
Year-end for Fund Managers is nigh – and for all of us really. Although many retail investors rarely carry out much “spring cleaning”.

So what is squaring all about?

It is a time to crystallise losses – that is you may have a stock that has under performed and maybe has accrued major unrealised losses. If you are no longer interested in the stock the question is whether you take the loss in this financial year or do you let it slip into the new one - July 1 – although not necessarily realising a loss on the first day.

As a former Managing Director and Chairman I can say that the reality is that companies would take a loss on the “chin” if the current year had been a very good one but if it was a bad one then losses might slip in to next year if a profitable year is expected. I do not condone the practice but this is done legitimately through provisions and accruals, the quanta for which is at times subjective. This is how losses can accumulate in companies and eventually bring them down.

So squaring the books is a fact of life for companies and fund managers alike. So which way this year’s end? Fund managers have had a tough couple of years so maybe they will decide to do nothing. Despite the recent rally they may have the view that investors have already accepted the harsh medicine and so maybe we will see no squaring off this year-end. That is what I suspect will happen and what little adjustments that might take place are more likely to happen this week rather than next Monday June 30.

Be wary at these times as some strange things can happen to some stocks.

It is good discipline at this time to think also about your own portfolio – do you need to do some pruning. Perhaps it is a time to be looking at yourself in the mirror and admitting to any poor decisions and quitting any “losers” despite the loss that you may have to wear – that loss could be even greater this time next year!

And what a week this last one has been - the market overshot – some banks have accepted the rate cut already and have reduced lending rates - and I sold out too early from a couple of stocks. The latter topic requires amore detailed treatment and I will do that in a forthcoming newsletter.

The market became a little over excited during the week and after a lot of frenetic activity settled pretty much unchanged for the week. I am sticking with my personal expectation of where this market might run to - in our April 28 issue I indicated my view was that the market would head to 3170. I will stick with that view not because I am stubborn – but because that still holds true – but there will still be some bumps along the way. After some consolidation I believe there is another high but it is a little too early to speak of such ephemeral matters.

Tom Scollon
Chief Editor