The New Year heralds a fresh beginning when we can start over and put yesterday's wrongs right. And the extraordinary past 12 months in personal finance have certainly given many of us good reason to review our actions, writes Paul Farrow
I wonder whether Alistair Darling and the Financial Services Authority will dither as much as they did in September should (heaven forbid) another bank fall victim to the credit crunch. The Northern Rock crisis saw panicked savers queuing for hours to get their hands on their life savings.
In an unprecedented step the Rock, the Bank of England and the FSA issued a joint statement to reassure savers. It is not a solvency issue, it is a liquidity issue, the trio kept insisting. But the statement did little good and the queues just got longer.
The FSA tried to persuade the press not to compound the crisis with hysterical headlines, but you never quite got the impression that those doing the pleading were convinced that the Newcastle-based lender was as solid as a rock. It took five more days of mayhem before the Chancellor delivered a cast-iron guarantee to savers that their money was safe; then, finally, the queues subsided. If he had acted earlier, billions of pounds might have stayed inside the bank's depleted vaults.
I wonder, too, whether investment groups will be quite as gung-ho about marketing funds that invest in assets whose fortunes were widely expected to change for the worse.
Commercial property had enjoyed a stellar run over more than a decade, but as 2007 approached many analysts, including property fund managers, were forecasting a tough year ahead because high demand for such property had sent prices soaring and yields plunging. With huge inflows of money being taken, fund managers were finding it harder to unearth value.
More than £1bn was invested in property funds in the first three months of the year as they proved more popular than any other type of fund. Alas, investors will be starting 2008 more than 10 per cent down - in some cases 30 per cent.
Now investment groups are nervous that investors will cause a run on their funds, which could bring about even greater problems. If there is a run, the managers should take a long, hard look at their actions. It would seem the lessons learnt in 2000, when over-hyped technology funds were sold, have long been forgotten.
Source
http://www.telegraph.co.uk/money/main.jhtml?xml=
/money/2007/12/31/cmpaul31.xml
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