Major misfortune and unit pricing policy combine to make June a month of doom and gloom Last month closed in optimistic mood for world stock markets as, yet again, European leaders at their latest summit reached vague agreements on how to tackle the debt crisis. The Investment Club, on the other hand, had one of its worst months ever. The unit price collapsed 13p to £3.24. There are two elements to the club's disastrous month: one, great misfortune and two, the club's unit pricing policy. We have toyed with the idea of dissolving our holding in 4 per cent consolidated stock and switching into another UK government bond. The reason for this is that while the club's holding of 4 per cent consolidated stock has served it well, both in capital gains and dividends, it has now lost all potential for growth. The situation has evolved over the years because the UK government has bought back this stock. That has made it very illiquid, and, therefore, widened the spread between the buying and selling price. This has made the stock less attractive as an investment and the price has stagnated. So the club's strategy was to disinvest 4 per cent consolidated stock at the onset of June. Then, when prices fell just before 12 June, when the largest June auction of UK gilts was held by the Debt Management Office, market makers would be selling stock to raise capital to participate in the auction, thereby depressing gilt prices. Then the club would buy. We missed the opportunity to sell on 1 June. This was the Jubilee long weekend, the markets did not open again until Wednesday. By the opening bell prices of gilts had already pulled back for the 12 June auction and the initial plan had foundered. None the less, we thought we would go into the market and get a feel for the spread and liquidity of the gilt stocks we intended to sell and buy because there might be another sell and buy opportunity before the second largest issuance of the month on 21 June. Through our online broker we put all of the club's 4 per cent consolidated stock up for sale to get a realistic a price as possible. We went through the selling process right to the end and saw the sale price. We did not accept the offered price and backed out of the sell order only to find the club's holding of 4 per cent consolidated stock had all been accidentally sold at an abysmal price. The club was now sitting out of a market it wanted to be in without any idea how it was going to get back without it making an immediate huge loss, as the spreads on UK government bonds are so large. With a plunging unit price and no sign of a solution, let us hope that by the end of July we will have thought of a way to salvage some profit from the continuing bull market in bonds.