The Great Debate UK

Lehman sparks a year of trading opportunities



-Angus Rigby is CEO of TD Waterhouse. The opinions expressed are his own.-

Volatility has been the name of the game since Lehman’s collapse, an event which sent shock waves through the global financial markets. The ripple effect on correlated sectors sent share prices on a roller coaster ride of unpredictable fluctuations throughout the year – and yet at the same time this very volatility paved the way for the profit-taking retail trader, if they got their timing right of course.

Volatility, a dirty word for the long term investor, has been the fuel driving traders who successfully shorted on peaks and bought on lows. Even the Bank of England cutting rates by 1.5 percent to 3 – the biggest single cut since 1992 – failed to slow down individual traders. In fact, in many ways, this has been The Year of the Retail Investor.

Things didn’t look too rosy to begin with though. According to a survey we conducted last December to track investor sentiment, confidence in the financial services sector had dropped significantly. It only ranked at 16th place in the list of sectors expected to perform best this year, a sharp contrast from its coveted 2nd position in the same list in 2007.
However, judging from stats that track our customers’ most popular trades, banks have been “Flavour of the Year” this year – accounting for 69 percent of our overall top ten trades.

Banks have always been popular, but they reached new heights in the aftermath of “Black Monday” in September 2008, with Lloyds and RBS the most traded stocks by volume. These two banking giants have accounted for 21 percent of our overall top ten trades in a rocky year of mergers, rescues, rights issues and redundancies.