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A nervous market #finance #investments

The markets have been nervous lately with too much uncertainty. The Trump effect in the US and the Brexit effect on this side of the Atlantic disguises some systemic problems in the global economic system. I think this nervousness is contagious and is spreading beyond the markets and into the homes of consumers who are spending less. They have been shopping around more for some time and we see that in the rise of discount supermarkets and the phenomenon of comparing prices and shopping around online. The culture of spend, spend, spend and maxing out the credit card is coming to an end.

a nervous market

Nervous market

The nervousness continued on the stock market this week with the FTSE 100 dropping below 7000 for the first time. I was hoping to sell Tesco for a 20% return but ended up accepting just under 20%. I now have cash in the bank and can look for bargains if the market continues to slide. To make matters worse, the market makers and funds continue to play dangerous games, shorting shares and wrecking companies by effectively destroying their creditworthiness. Shorting is little more than putting a rumour round that a company is in serious trouble and then when they can’t get investment; they are in serious trouble.

Immupharma

Immupharma’s share price collapsed as market makers played games and recovered when the bigger investors bought up shares on the cheap. This morning they have trashed the price again because the latest RNS is good news. Small investors have to sit tight and not be panicked by the sudden drop and many with spare cash in the bank will top up.

GSK

I wrote myself a note to the effect that I should consider buying GSK if they dropped below 1300 and they did this week. I was, however, nervous about interest rates going up and the value of the pound rising. Some good news on one of GSK’s products sent the share price over 1300 again this morning. It is difficult to know when to buy on the lows. GSK gets a lot its earnings in dollars, so the low pound is a benefit but the value of the pound is slowly rising.

What next?

I’ve now sold over 1/3 of my portfolio so have the cash to look for bargains and in a nervous market. With market makers suddenly dropping prices to pick up cheap shares and trigger stop-loss orders, it could be a time to be brave rather than nervous. I did quite well when the market was nervous following the 2008 credit crunch so this could be another opportunity to invest for the long-term. I will be very cautious and I’m in no rush to part with my money. I might even buy Tesco back if the price continues to fall. The Booker takeover will give them more revenue in the future.

As always, I write about ideas and I don’t give advice. It is obvious that now is not a good time to have a lot of debt. There does seem to be a shift in investment from the stock markets to property and gold and worryingly into crypto-currency.

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