Financial Strategies for Today: Accumulation and Profit Taking
5 August 2026
To all Financial Friends
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Current Comment
The World at Large
Our world faces serious economic challenges. Uncertainties that can unnerve our sense of security and confidence. Yet hope springs eternal. We still hope and believe for a better, more peaceful, stable and secure future even though there are dark clouds around. War, tensions between nations. High government debt, and financial instability create genuine risks to future prosperity. Oil and essential distributions for the global economy being strangled by conflict involving the Iran war and closure of the Strait of Hormuz continue to deeply concern. Outcomes are uncertain.
My hope is that we are understanding that whatever the background, there are always opportunities for investors to profit. See below that one of the technology funds students have been using has gained 68.4% in just the last 12 months. Turned into cash, quite simply, just £1,000 invested for 12 months provided £684 cash in hand if withdrawn,tax free if held in an ISA. We can look at the negatives but many place their trust in the remarkable, fast paced advances being made in artificial intelligence.
Many believe that if AI fulfils even a substantial part of it's promise, it has the potential to create economic growth, improve healthcare and raise living standards. Right now there has been a strong rise in technology shares as companies have used their recent exponential growth and profits to plough into AI development. There are some who fear the valuations of the Magnificent Seven companies are too high and the expected future results may disappoint so leading to an eventual strong market correction or a so called market crash.
The Tsunami growth of technology and AI leaves indices in America reaching all time high levels, even against the global backdrop of darker concerns. Hope springs eternal.
The United Kingdom
A new Prime Minister can bring new hope for a better future. New ideas and promises. New vision. Andy Burnham it seems, has set his cap at making us all feel better and hopeful. His first actions have been to cut the cost of living with bus fares capped at £2 and VAT reductions on domestic electricity bills. Cutting the cost of living is his Cabinet's headline. Allowing enough funding to build the country's defence capability is not ignored. The latest significant announcement is to provide Social Care for our growing elderly population.
The big question is 'where will the money come from?' The Times newspaper today reported that ministers were planning to exploit or adjust the fiscal rules to allow for billions of pounds of extra borrowing for investment. This to allow for borrowing of £9 billion a year.
Please look back over past commentaries expressing my concern over the perception of the bond market (fixed-interest market) as being a 'safer' place for our money. Will foreign governments and wealth funds still lend to the UK without demanding ever increasing interest rates on the debt to cover their sense of risk?
At the end of the day borrowing more and playing with fiscal rules - moving deck chairs on the financial Titanic - cannot be the answer without achieving the growth we need. But hope springs eternal.
FTSE 100 breaks all records! Why?
To the delight of our many monthly savers and those using the 100 Index it now stands at a record breaking 10,868 points! But surely the UK economy is considered at risk? Absolutely. However, the 100 Index gains from over 75% of it's make-up earning revenues from overseas. It is really a collection of global businesses domiciled in the UK rather than a pure UK index. The FTSE has large holdings in oil companies, mining groups, banks and defence companies. These sectors perform well against the background of war and geopolitical uncertainties.
The Five Strategies
Some students have adopted one (or even a mixture) of the five strategies discussed in the Money Awareness Course. Recent commentaries considered three of the five being 'Go for Growth' / 'The Diversification (Mixed Asset) model' and the '60/40 model'. Today we consider the last two strategies against the background indicated in the current comment given above.
The 'Accumulation Model'
The accumulation model was (and still is) for those seeing the global economy heading for a strong correction or even a so called market 'crash'. Accumulator students, say with £10,000 to invest would have held perhaps £7,000 in cash, or better still in a Money Market Fund. The balance of £3,000 being invested in global equities. These students have had a foot in both camps. One foot in the safety of cash, another in the risk of equity volatility.
Accumulator students would have been pleased with the growth on their £3,000 equity holdings. They are ready and expectant to see a downward market correction as an opportunity. They will move, some of their cash holdings into equities at a lower price. When equities recover, they will have increased (leveraged) their profits as a result of buying at a low price and benefiting from the extra profit made when the market recovers.
Meanwhile the cash holdings were there and available if needed as life circumstances might demand. Consider this strategy in light of the current comments above.
The Profit Takers Strategy
This is the much enjoyed strategy of those who have recognised with us the uncertainty in the markets which creates unusual short-term profits. Profit takers are realising that with inflation at 3.75% (confirmed today by the B0E) that again of even 12% increases their wealth. If taken from their portfolio. What goes up one day comes down another. Gold is a great example. Some students more than doubled their money in gold and silver over a recent 12 monthly period. Yes, £1,000 invested became over £2000 in 12 months.
Investors will have taken profit to hold in cash or Money Market funds or just to spend to maintain their lifestyle or even pay their rising bills! Gold and silver funds have fallen by some 24% in the last three months. Several assets have fallen over the last 3 months so profit takers may be considering re-investing their stored up cash. Cash on deposit is not the best place with inflation rising so only those fearing a significant market correction will want to hold on to their cash for now.
Here is a view of profit taking opportunities seen over the last 12 months looking at the spread of assets held by many of our students. Here are the figures for just the last 12 months. Gold and Silver funds gained +45.4% (even after allowing for the 24% three month fall). Natural Resources put on +44.6%, Global Infrastructure +17.4%, Technology +68.4% UK Infrastructure +8.9%.
Turn these gains into cash for every £1000 invested and here is what you get. Gold and Silver £454, Natural Resources £446, Global Infrastructure £174, Technology £684, UK Infrastructure £89. Students have taken profits and left the original investment for the longer term - although watching out for more profit opportunities.
So that's the really good news whilst the remaining assets held by a good number of students rose in value by only 1.8% to 2.8% over the last 12 months. A mixed asset fund put on +5.3% so comfortably above inflation levels.
I have repeatedly said, and do so again, that such short-term profits are abnormal (unless they have become the new normal). Across very many past years of giving advice I have always stressed that investment should be for the long-term allowing for the ups and downs of market performance. But should we ignore the short-term opportunities that are factual and right in front of us whilst they remain?
Please read all the above together reflecting on previous commentaries to follow the story of students experiences and be aware of cautions such as, your investments will fall as well as rise so encashment at a low point for the asset(s) held could mean you might get back less than you put in.
Information and Guidance
As is always the case, always feel free to use this Calendly link: www.calendly.com/yourfinancialfriend to book a time to update and talk with me and get the clarity you need for your ongoing investment decisions. Always glad to hear from you and ready to help.
Commentaries that you read in the financial press or here are not advice. Commentaries seek to provide accurate information and offer comparative insights. Our commentaries clarify and make you aware of your options and choices. What you could do, not what you should do. Information and guidance allows you to come to your own conclusions.
PLEASE NOTE: A financial or economic commentary like these, are written to explain, interpret or give an opinion on economic events and markets to help readers understand what’s happening and why it matters. Designed to help you make informed decisions of your own by making you aware of opportunities, risks and potential rewards in the market.
