Dear Reader,

The great unknown is with us. Or as Bill Bonner would describe the current environment:

 “Into the wild. Yes, dear reader, we are going where no man ever went before… into the wild. All around us is virgin territory. No one has ever been here before.” (The Daily Reckoning- November 19th).

The great unkown is all around us. I thought that in a market where information was scarce, directors dealings would give us an indication of either current trading, directors views on current share valuation, or ideally both of the above.

Until GKN:

October 28th- Five directors of GKN increase their holdings by about 75% at around the 100p level (followthedirectors October 30th).

November 14th- ‘Issuing its second revision to guidance in three weeks, GKN said output at its driveline and powder metallurgy divisions would be sharply lower following a “further rapid and material decline in conditions in its global automotive markets” (Reuters November 14th).

And Laird, and probably many others still to come.

Which only goes to show that the directors themselves have no clue as to what is going on out there. Which means we are in uncharted waters, in the great unknown, or ‘into the wild’.

I shall endeavour to continue to give you my interpretation of directors dealing activity, but that must be almost worthless if the directors themselves have no clue what is going on in their own businesses from one week to the next.

I suspect it could take a few months for the smoke to clear. In the meantime it may be that directors selling activity is a better indicator of future risks in their businesses.

Please bear with me.


Simon Winfield