Sterling Work As The FTSE 100 Rebounds

Published in Investing on 4 July 2013

The FTSE 100 gains over 180 points following news from the Bank of England.

Is the FTSE 100 (FTSEINDICES: ^FTSE) back in business? After yesterday's crash of over 100 points, the index has immediately rectified itself -- and climbed even higher for good measure!

Today, the Footsie closed with an increase of more than 188 points at 6,418, a 3% climb on yesterday's closing price. In fact, it's the highest it has been for a month, these levels not seen since 5 June when the index closed at 6,419. While yesterday's losses came from global sentiment, today's gains were a result of news closer to home.

Sterling work

The value of sterling crashed as the Bank of England kept its QE programme in place, and said assumption that interest rates would soon be raised was speculative. As a result of cheap borrowing costs continuing in the foreseeable future, the FTSE 100 saw a rally of 50 points on that news alone.

The market was further cheered by news that the political crisis in Portugal was easing, calming fears of another imminent bailout, while turmoil in Egypt came to a conclusion as president Mohammed Morsi was removed from power in a military coup -- the likes of Centamin, which is heavily tied to the country's political and economical trevails -- have since soared, with Centamin lifting over 17% on the news.

We're backing the tortoise...

What does this mean for Foolish investors? Well, while many will breathe a sigh of relief to see their portfolios recover to an extent, we've long extolled the virtue of patience. This is what stock markets do -- they rise and fall, which is exactly why we advise against 'fad' stocks. Instead, we look at big, reliable, cashflow-generative companies, which will still form a central part of your portfolio in the years to come. 

In fact, how about one that offers a solid income yield of well over 5%? The company has been declared "The Motley Fool's Top Income Stock For 2013"... want to find out more? Well, just click here to download the report -- it's completely free, and will be sent to your inbox immediately!

The F word

In summary, foolish (note the lower-case 'f') investors will be holding their heads in their hands if they sold at low prices yesterday, only to see the shares surge today; while to a Foolish investor, any dip in the market provides the chance to buy solid companies at cheap prices.

I know which type I'd rather be...

> Sam does not own shares in any company mentioned.

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