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Strategic decisions #FinanceFriday

The pandemic has caused a recession but how deep is the recession and can we recover? It is difficult to know precisely how bad things are, some estimates suggest it has wiped 10% off GDP while other estimates suggest 30%. We have to make strategic decisions based upon what we know today and accept that the future is unpredictable. I don’t think it is a good time to be moving house or making major purchases unless you want to take advantage of the low-interest rates.

strategic decisions

Capital

Many companies now need capital and are issuing new shares to get the investment they need. There are opportunities to invest at a discount but are these companies a good bet? They obviously haven’t built cash reserves and might be already unduly leveraged. I see smaller companies as being a big risk while larger companies offer investment opportunities at reduced risk. I think shares in banks look cheap but only if you think they will recover well from this recession. They recovered from the 2008 recession and they had the added burden of PPI claims then. I’ve bought a few more shares in Lloyds and a small holding in Barclay’s. This week, I continued my move towards making strategic decisions and bought RDSB which I hope will give me a return if the oil price once again begins to climb. That decision was also influenced by a rising price for natural gas, although that is falling so far today.

eToro

My investment in RDSB was through my usual platform but I’m watching my holdings on eToro and assessing how useful that platform is too. So far I’m not making a profit but Covid is surging in the UK again and so affecting the stock market. The US also has wildfires sweeping across three states besides Covid. Their President doesn’t inspire confidence either but he will probably be voted out in November. Will investing confidence return in 2021 under Joe Biden? There could be a bull market in 2021, I can’t see things getting any worse for the US. My eToro account is in dollars and exchanging GBP to US$ accounts for most of my loss. An appreciating US dollar in 2021 would benefit my eToro account.

Thrifty and frugal

As always, I’m being thrifty and frugal and that applies to investing as well as supermarket shopping. I spent money on an app to write my blogs this morning and if I could have avoided spending money I would have! I’m already thinking about Christmas and whether buying gifts is a good idea. I’m inclined to think I’ll buy gifts as usual and if we can’t visit each other we’ll find a way to exchange gifts. I think I’ll be buying all my gifts online, though! Covid-19 problems will continue for some time in the future, we just have to make strategic decisions about our money, healthcare and lives until we manage to eradicate it or control it.

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