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Should we fear October

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Should we fear October?

11 October 2017

October is considered by many to be the scariest month. This year, not only do we have Friday the 13th to contend with, in addition to the traditional Halloween mischief night and trick or treating, but seasoned investors may know that October is historically one of the most volatile months for stocks.

Additionally, for those of you who are superstitious, 2017 may bring extra dread if you believe the ‘curse of the number 7’. This relates to the theory that the month of October suffers especially significant drops, in particular, in years ending in the number 7.

The most well-known cases of this phenomenon were in 2007, 1997 and, of course the largest of drops, known as ‘Black Monday’, in 1987.

On 19th October it will be 30 years exactly since ‘Black Monday’, when the FTSE 100 index dropped by 12.2 per cent and the Dow Jones plummeted by almost 22 per cent in just one day, falling by 508 points. This still stands on record as the biggest single-day percentage decline.

However, despite the dramatic falls, the crash of 1987 was relatively short lived. During the next two trading days, the Dow gained nearly 300 points and the market actually finished the year above where it started.

The stock market is resilient and has recovered from difficult times. When considering the month it is worth remembering that past performance is not an indicator of future results. October is actually one of only 3 months in the year when the FTSE 100 tends to outperform the mid-cap FTSE 250. This could be due to the fact that October signals the end of the weak trading period, starting at the beginning of May, caused by the ‘Sell in May’ effect.

Additionally, on average, markets in October tend to rise in the first fortnight of the month before falling back. The last few days of the month tend to see a rise and the last trading day of the month usually has the best record of any month’s final trading day.

This year could be a positive one for October, as gains in the market have successfully navigated August and September, the worst two-month stretch of the year, based upon historical performance. If this trend continues in October we could see even stronger gains in the market going into 2018.

However, with the threat of a potential rise in interest rates, tightening monetary policy in the US and the conflict between the US and North Korea and other geopolitical factors it may be worth keeping a look out for signs of potential volatility.

Be prepared to react but keep a level head, don’t panic and think about the longer term. Having confidence in your portfolio and holding well-thought-out investments with long-term strategies should help you to stay calm when others may not.

Additionally, if stocks do fall in October, as history suggests, then this could actually present buying opportunities, especially if stocks become attractively valued.

Of course, if you find that you lack the time or opportunity to monitor your portfolio then you may wish to entrust the running of your portfolio to a qualified Investment Manager, obviously I would be only to happy to help out.  Please contact me on 07711 710 628 or Rupert.harvey@redmayne.co.uk.

Please note that investments can fall as well as rise in value and past performance is not an indicator of future results.

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Equity Insight

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We continue to live in volatile times and global equity markets are reflecting this.  We have seen geopolitical tensions rise as North Korea continues to ‘tease’ the Donald and the on-going drama of the Europeans and British negotiators speaking in foreign tongues making the perfect antidote for insomniacs.  Even mother nature is getting a little restless by sending a few ‘gusts’ around the world!

Given all of the above I thought it worthwhile to add another bit of useful information about shares and the rights of shareholders in the this link Equity Insight – Issue 656.  As always feel free to get in touch if there is anything that you might feel inclined to talk about.

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As many young people get ready to head off to uni, and the latest batch of graduates enter the job market, it’s worth taking a look at what the apprenticeship system can offer individuals and businesses.

We all know that having a well trained workforce is essential. Just over half (54%) of small firms say being unable to recruit the right person has hit them financially. Well, why not create the right person?

We are seeing the benefits of that ourselves at Altus. Chloe Handy joined us almost a year ago now. She has spent 1 day a week studying at Stourbridge College, while learning with us in the ‘real world’. She has recently gained an excellent 87% merit pass in her AAT Level 2.

The apprenticeship has worked for Chloe, giving her the opportunity to study for a qualification while gaining practical experience in a ‘proper job’. It has also worked for us because we have gained an employee that we can train from the ground up in the ethos and culture of the way we do things here at Altus. From a financial perspective we enjoy a ‘discount’ from the minimum wage in the early stages when the apprentice is learning the role and we got a small grant towards all this too.

Chloe is not our first apprentice. Amy also joined us as an apprentice and has developed into a highly valued member of the team having moved from administration to payroll and now bookkeeping. Christian also developed his skills through the apprenticeship route, although not with us here at Altus.

Of course, as with all recruitment, getting the right person is vital and apprenticeships should certainly not be seen as a short-cut to the recruitment process. The difference is that you are looking for potential not the completed package.

In May there was a change to the way the apprenticeship scheme is funded. This included a new concession for firms with less than 50 employees taking on apprentices aged 16-18. While large employers will have to contribute 10% of training costs, this will not apply to those small firms. Instead the Government will pay 100% of the training costs.

Because 16-18 year-olds can incur additional costs to support in the workforce – such as needing more supervision and pastoral care – employers will be given £1,000 towards this.

There’s also cash help for taking on apprentices from deprived areas, who were in care or have an Education and Health Care plan. A flat rate of £471 for training will also be given if the apprentice still needs to reach minimum standards in English and Maths.

The changes are underpinned by the new apprenticeship levy paid by employers with a pay bill of over £3 million. The plan is to double investment in apprenticeships by 2020.

Taking on an apprentice can have lots of benefits for a business, allowing you to grow your business by training up a workforce to meet your specific needs.

 

 

 

 

 

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Key changes to Making Tax Digital scheme announced

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HMRC has announced its revised plans for its Making Tax Digital scheme affecting businesses – and it seems to have listened to common sense.

MTD, as originally announced, came in for a barrage of criticism from accountants, tax experts, businesses, and politicians from all sides. It would have seen everyone turning over more than £10,000 forced to keep digital records and file quarterly returns, beginning next April.

The new announcement sees changes to which businesses are affected, when, and even which taxes it relates to. The key points of the revised scheme are:

  • MTD will only apply to VAT until at least 2020
  • Businesses below the VAT threshold (currently £85,000) will be able to opt-in if they want but it won’t be compulsory – yet

The scheme will begin in April 2019. From that date, businesses over the annual registration threshold will have to keep digital records for VAT purposes, providing their VAT information to HMRC through MTD software.

MTD for VAT will be piloted using small-scale private testing towards the end of this year, with a larger live pilot next spring.

The Treasury says businesses with a turnover below the VAT threshold can choose to use MTD, and opt in for other taxes, ‘benefitting from a streamlined, digital experience’. It is not clear when this will be from.

It also says it will not extend MTD to other taxes until the scheme has been shown to be working well, or April 2020 at the earliest.

In my previous blogs on MTD, while arguing against the timescale and requirements, I pointed out that having up-to-date information really benefits businesses and day-to-day decision making.

So while many business owners will be happy to have dodged a bullet for now under these revised MTD rollout plans, the Treasury remains committed to a digital tax future. As it says, millions of businesses are already banking, paying bills, and interacting online. Digitising routine business tasks such as record keeping is the next step and is one many businesses have already taken.

For help and advice on record keeping, and how to get the most out of your accounts, contact us here at Altus.

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3 golden rules for success in business

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Being in business is a struggle at times. Read the stories of any successful business man or woman, and none of them will have had a smooth ride to the top.

It is very easy to get caught up in the day-to-day battles. This is especially true in a sole trader/owner-manager business. You often have no-one to tell you whether something is good or bad, someone to add perspective to a situation.

In the early days of my business a very wise friend gave me some advice. He said that when you are working by yourself it is easy to have huge swings of emotion – one day it is great, the next you want to give up. Something very small can tip your mood; one small thing can turn a great day into a disaster.

Often you will then look to blame yourself and come up with all the reasons why you are not capable of running a business. In reality it is probably nothing to do with anything you have or have not done.

But you don’t have anyone to tell you that.

These are my three pieces of advice to help smooth your journey through the ups and downs of business:

  1. Never make a decision off the back of a ‘bad day’. If you are having a bad day, step back and make your decisions later with a clear head.
  2. Always watch the tide and not the waves. Business can be rough and the waves can push you up and down but it is not the wave which we need to look out for. The wave will be here one moment and then will go past us. It is the tide that we need to be aware of, washing us out of our depth or up on to dry land.
  3. Always try to make decisions from a position of strength. We often make bad decisions when we are under pressure or forced into a corner. Just because it seems like a way out of a problem does not mean that it is the right way.

At Altus, we support clients by providing that listening ear and sense of perspective. We are at the end of the telephone line for that quick ‘can I just run this past you?’ call, while our Freelance FD services provide a critical friend on a regular, on-going basis. Click here to find out more.

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