Britannia Radio

Enjoy!

One I remember and adapt  from an earlier recession is "What do you 
say to an unemployed investment banker?"   "Big Mac and Fries please"

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TELEGRAPH      10.12.08
For brave investors only: 10 ways to tell that you are touching bottom
Telegraph readers, I salute you. After this column last week offered 
a bottle of champagne for the best top-of-the-market signal that 
should have alerted us to the looming credit crunch, there were 400 
postings on the website and about 20 letters in my mailbag.

By Jeff Randall

Your correspondence contained a delightful mix of shrewd insight, 
bitter experience, and one or two ideas that, if I were generous, 
indicated a need for mild sedatives. The majority, however, were 
observations from the University of Real Life, lessons drawn from the 
daily grind in a bubble economy.

This column suggested that the most reliable signpost to the end for 
irrational exuberance had been the £2.2bn stock market flotation of 
Mike Ashley's Sports Direct, a rag-bag of leisure brands that regards 
corporate governance as a theoretical concept. In less than two 
years, under eccentric leadership, the company's shares have lost 
nearly 90pc of their value.

Many of your examples were far better: such as the proposed launch in 
summer 2007 of an all-pink airline called, wait for it, FlyPink. 
Based at Liverpool's John Lennon airport, it hoped to cater for women 
of a certain type - Victoria Beckham wannabes - who fancied shopping 
trips to Paris, Milan and New York, while enjoying free manicures and 
pink champagne. Today, sadly, there is no sign of the start-up on the 
airport's website.

In a similar vein, though rather more enduring, was the stock market 
launch in Canada of the gloriously named, lululemon, a clothing 
company specialising in "yoga-inspired apparel". Its shares touched C
$37.24 before falling back to C$13.48. Yogis, it seems, can be 
liberated from worldly suffering, but not from the spirit-sapping 
forces of financial gravity.

There were, of course, many instances of madness in the property 
market, including the sale of a former public lavatory for £195,000 
(four times the guide price), a one-bedroom flat "on a dodgy council 
estate" that went for £200,000, and a dilapidated tin-roof beach hut 
for £90,000.

Other gold-plated pointers were: a Benjys sandwich bar that became a 
branch of Hermes, daytime TV filling up with debt-consolidation 
commercials, supermarkets selling finance for buy-to-let mortgages, 
and a chronic shortage of butlers for business lunches.

When David Wilson, founder of David Wilson Homes, sold his 
housebuilding business to Barrett for £2.2bn, half of which was in 
cash, we should have guessed that trouble was coming. Likewise when 
Tony Blair handed the keys to No 10 to Gordon Brown, it ought to have 
dawned on us that the illusion of good times was about to end. And 
what about when HSBC sold its head office to a Spanish property 
company and lent the buyer the money to complete the transaction? 
Boy, how did we miss that one?

My favourite, however, was submitted by Mr Richard Kellner: "The huge 
rise in divorce enquiries from the trophy wives of bankers, which 
began last year. The wives might be light on loyalty, but they know a 
busted flush when they see it." Sir, your prize is something 
appropriately fizzy and expensive.

Meanwhile, a few hard-hearted souls accused me of wallowing in 
hindsight, ie, being clever after the event that I failed to spot. In 
my defence, I invite you to read this paper's business section of May 
3, 2006, in which I listed "10 reasons why it's all going to go 
horribly wrong".

That said, it's no good resting on one's laurels. The top of the 
market has long gone, but what about the bottom? How will we know 
when the downward plunge in asset values has ended, and the turn is 
about to occur?

I am grateful to Guy, who commented: "We will only know we are at the 
bottom when Sarah Beeny is eating maggots on I'm a Celebrity." Ms 
Beeny, for the uninitiated, is a TV personality best known for 
presenting Channel 4 property shows, such as Britain's Best Homes.

Conventional wisdom is that the bottom is reached when the last bull 
becomes a bear. In other words, when capitulation is complete. Only 
then can recovery begin. For those who prefer a more off-beat 
approach, here are 10 other possible indicators.

1 Investment bankers' children stop lying about what Daddy does.
2 Chocolate biscuits are again acceptable at directors' meetings.
3 Our worst universities are full for MBA courses.
4 Roman Abramovich abandons Chelsea.
5 The cost of keeping a boy at Eton falls below the average wage.
6 A celebrity chef is paid to endorse McDonald's.
7 The number of houses being repossessed in a year is greater than 
the number being built.
8 Royal Ascot accepts sponsors for its races.
9 A well-known charity goes bust.
10 Gordon Brown says: "I've had enough of this".