Time to sell, says Roy

By Shaun Inguanzo
A DANDENONG accountant is urging ‘mum and dad’ investors to sell their shares as the United States sub prime crisis continues to have a severe impact on the stock market.
Roy Sanderson, owner of RJ Sanderson and Associates, this week said in a media statement that some financial advisors were telling families to keep their share holdings, but with an ulterior motive.
Mr Sanderson said there was no mistaking that the US stock market was heading for a ‘fully fledged crash’.
“The logic behind the warning for investors is relatively straight forward,” he said.
The US sub prime market has affected many large United States companies listed on the stock exchange. It has reduced the ability of major companies being able to refinance their huge debt levels.
The financial year in the USA ended on 31 December 2007 and the reporting season starts in February through to March.
“When US companies declare their 2007 results they will be forced under Directors liability to explain future risks in relation to refinancing existing debts and the negative effect this may have on future earnings.
“Many companies may outline the negative effects it will have on the ability for the company to survive.”
Mr Sanderson said this would trigger more Centro-like examples of big corporations being unable to refinance huge debts, leading to a massive slide in share prices that could harm working families’ investments.
He urged the mum and dad investors – a term used to describe working families with minor share investments – to consider selling and ignoring pressures from financial advisors to keep their money invested.
“Many financial commentators and financial planners don’t want to create panic and more selling pressure,” Mr Sanderson said.
“Therefore they are advising investor clients to sit and wait while the major investment banks and institutions are selling down shares as fast as they can.”