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Market Comment - July '07

July 2007

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Earlier this year we suggested that Japan could be the surprisepackage of 2007. So far the Nikkei 225 is up 5%, under performing theUK and the rest of the world's stockmarkets, so not yet a lot ofexcitement. But if you are a contrarian, Japanese smaller companies arecompelling.Some historical context is required. The Japanese stockmarket beganto recover in 2003, after a horrible 14 year bear market, when the mainindex fell from 39,000 to 7,700. The recovery ran too far too fast andby early 2006, valuations for smaller companies in particular werestretched. Interest rates went up at a time when concerns began tobuild over US economic growth. This coincided with the Livedoor scandaland smaller companies fell by up to 50%.   ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

All material on this website is protected by copyright. You may use Information retrieved from the www.scsw.co.uk website for your own personal non-commercial use which means that you may not sell or copy this information to any third party without prior written consent. ISSN 1358-183X

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