I'm deeply upset this weekend, I have to tell you - Scotland has slipped behind the USA - with "behind" perhaps being a highly appropriate word.............no longer is Caledonia the world's most obese nation. Down to number two and with Ireland about to relegate us further at any moment. Alex Salmond should do something about it. And that demand is little more ridiculous than the one currently being made by private shareholders in Northern Rock, who are seeking to pursue a "class action" lawsuit against the company, alleging they had been "misled" into investing. Do me a favour guys - take the loss and get on with your lives. You have no chance of getting back any more than the current "value" of your shares IF you decide to dump them (that's NOT an incitement to do so, by the way - they MIGHT recover a penny or two) - where do you think the money would come from to compensate you? The taxpayer? The tooth fairy? If anyone deserves proper compensation, it's the innocent who bought into Equitable Life pension plans on the back of government assurances at the time - because most of these people were NOT "investors". Investing is a risky business - well beyond the "risk profile" of most of us in fact - and it's necessary to accept that if a deal goes badly, it goes badly. (I would say however that if an EMPLOYEE of a company is 'encouraged' to buy shares therein and if accepting such shares reduces any future pay rise percentages, then he or she would be exempted from my otherwise harsh view of such matters.)

Anyway, with that off my chest, onward to another risible situation - Gordon has decreed that the "private equity" tax loophole is to be closed. He refers to the fact that London based private equity firms have been enjoying a highly favourable tax regime that has allowed most of the (very) high earners to "pay less income tax than their cleaners" as the media puts it. Gordon - you're just a wee bit behind the times. Private Equity firms won't be paying a whole lot of tax for a mighty long time, for the very simple reason that the credit crunch (type 'credit crunch' into the WICS search engine if you're new to my ramblings) has meant their funding has more or less vanished, so they won't be doing too many deals for the foreseeable future. In fact, YOU might end up paying THEM - in the form of income support....oops - sorry, I keep forgetting you're no longer chancellor....

Moving along, there are just so many little things on the go that tickle the somewhat offbeat Williams sense of humour that maybe I'll save some for later - but I have to mention the increasing use of sewers to route internet cabling. Now that just has to be an appropriate extra use for them, given the volume of online effluent generated! (And if you want to include these ramblings in that description - well, that's up to you.)

Next, it's interesting to note that Abbey Bank (now owned of course by the Spaniards, via Santander Bank) no longer uses BACS electronic transfers - nor even first class post - to send you a cheque, should you ever have the bad grace to want to withdraw funds. Maybe we can blame the "manana" culture of the owners? Or could it be that such delays add up to an awful lot of interest payments kept by the bank? Answers on a postcard please.

On to matters closer to our hearts - earlier, we spoke about "investing being risky" and now it might be an idea if I discuss the main differences between "investing", "trading", and "speculating". You'll know of course from having carefully read the manual - you haven't? - shame on you! - that Williams doesn't "INVEST" when it comes to stocks. I SPECULATE, via the medium of TRADING. Does that make sense? What I'm getting at is that the concept of "investing" - as in "investing in one's future" etc etc implies a long term timescale - indeed a lifetime. Warren Buffet of Berkshire Hathaway (Google him for more) is an investor. He buys shares in companies (after having conducted massive research) and his fund keeps them "for ever". Most (although not all) of his investments have done extremely well over the long term - by which I mean at least ten years. He is a brilliant investor. He finds companies that are massively underpriced related to their assets and then he invests IF everything else stacks up too. Nowadays of course he's so famous that the minute Berkshire Hathaway takes a stake in a particular company, its shares start to rise because "everybody" perceives that it "must" be a great buy! Now I mean no disrespect when I suggest that YOU are not Warren Buffet - and even if you were his equivalent in knowledge, for sure you don't have his level of access to information and research. So why would YOU want to "invest" - ie to buy and hold "for ever" the stock of any particular company? What are the potential upsides to investing? First, you MIGHT enjoy capital growth. Second, you MIGHT enjoy an ever - increasing dividend. Third, you.........hmmm, I'll need to have a think about that. Oh yes - you MIGHT enjoy discounts on the products provided by the firm in which you have invested - I recall the Channel Tunnel as a good example thereof.....Fourth,.....no, I don't believe "fourth" exists. The point I'm getting at in the usual flippant Williams manner is that BEFORE buying shares, you need to ask yourself "WHY do I want to buy these?" If the answer is "Because they're a hot tip" or "Because I just KNOW they're going to keep on going up" then you have to question whether you're actually an INVESTOR or a SPECULATOR. A long time ago in WICS I recall mentioning that my wife collects paintings (I daresay if you type 'paintings' into the search engine you might find the reference) and that they are worth nothing to us financially because we would never sell them. An awful lot of people buy shares that (even if they rise in price) fall into that same category - they keep them "for their old age" but eventually all that happens is that they form part of an estate and the kids get about half the value after tax. They are totally without value to the original purchaser because he or she has shuffled off. Tell me I'm wrong! And of course the other MAJOR point is that if you are going to INVEST, how do you profit when ("when" mind, not "if") some of your holdings drop in price? "Ah, but I'm in it for the long term, and these are only paper losses..." Tell that to Northern Rock or Tate & Lyle shareholders right now - or to BT, or the old Marconi, or....

Contrast the above with the concept of SPECULATING. It's just SO downmarket, compared to INVESTING, isn't it? I mean, it's not something you want to admit to at a garden party. I don't suppose I'll ever get the chance. But as a speculator, you can profit from falling prices just as easily as from rising ones, and your only objective is to MAKE A PROFIT. Don't tell me that hard - core "investors" see that as their main/sole objective - think about it! Trading of course is the VEHICLE for my speculation - simply because of the fact that I can SELL just as easily as I can BUY, to open a position. Spread betting is then a "vehicle within a vehicle" - it's one way (and a very easy way) of opening positions, but you could also use CFDs or Options. (please ask your broker to explain, not me, if you want to know more.) And of course the REAL objective surely is to SPEND the profit! (Don't get me wrong - although my family can spend for Scotland - what I mean is to LIVE off the proceeds of your speculating. You would need a mighty successful investment portfolio to be able to do THAT these days!) You 'circulate' your capital - you don't tie it up for good in a particular portfolio. When your profit target is reached (or you're stopped out via your money management system) you recirculate the cash - and so it goes on. Your cash is your stock in trade and you don't allow it to be locked away. (In an "investment" scenario your funds are only "locked away" psychologically of course - you COULD sell some shares - but you'll ONLY sell those that are still a "green crop" - ie they'll likely rise a lot higher after you sell 'em - and you'll NEVER sell the total dogs because "they might recover"...)

Anyway, enough already - hopefully these musings might help you reflect a little whenever you get the urge to buy a share that's a hot tip on some bulletin board or other. As if...

Okay, time to have a look at a chart or two then. First we'll update Tate & Lyle given its big drop - it's one that has been featured in WICS in the past. (Those of you who have video update access might care to view clip 708 from 9th September). Then we'll examine the possible significance of "160" for shareholders in Friends' Provident, before looking at a trendline probe and subsequent retrace on the Halfords chart. Finally for those of you who like a bit of "index analysis" we'll take a look at the German DAX.

And that's the lot for this weekend - please note that my travels over the next two weeks will mean a limited mentoring service for a few days - I won't be able to answer emails between 11am on Wednesday 3rd till the morning of Sunday 7th October - but WICS will be produced as usual next weekend. (I was going to say "as normal" but there's little "normal" here!)

Happy trading until next weekend then.

Ian.

'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'