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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


Understanding supply and demand #finance

One concept I have tried to explain in these finance posts is that of discretionary income. Discretionary income is the money we have left over when we have paid for all the essentials like housing, taxation, food and so on. Discretionary income is the money we have left to enjoy life and take holidays. So if we can double that discretionary income either by saving on buying the essentials or finding an additional income from investments then we can double our effective standard of living. The other concept that people find hard to understand is supply and demand and how this affects prices.

supply and demand


Keeping your nerve #finance #investments

Sometimes investing is about keeping your nerve as markets go down or become more volatile. We saw the first signs of protectionism by the US after President Trump announced import tariffs on steel and aluminium. I think he set the tariffs too high but considering that the Chinese manipulate their currency to boost exports I can see why he did it. He isn’t smart, though. The smart thing to do would have been to raise the standards on steel and aluminium to restrict the importation of cheap substandard steel. He could apply that principle across a range of imported goods and so limit imports and give people better quality products. Politicians are never very smart.

keeping your nerve


The Carillion effect #investments #finance

Since Carillion went into liquidation, people have been asking questions.Why did it pay a high dividend last year when it was in such a perilous state? This week, The AA announced a new strategy of investment and a cut its dividend to 2p a share. This is a good thing for the company, employees and shareholders but the share price still tanked. The Carillion effect, in this case, was to make them think long-term but we can conclude from the reaction of the market that, the market, in fact, considers only the short-term.

The Carillion effect


City spivs and bubbles #finance

At one time spivs in their sharp suits tried to sell you a watch or a pair of nylon stockings. Now they wear Rolex watches, flash iPhones and try to sell you Bitcoin or Ethereum. These alien currencies are mined, using lots of energy and extremely expensive computers, they are nothing but a con which will be exposed and crash, somewhat like the collapse of Lehman Brothers. At least Carillion was building roads and hospitals despite the fact they were paying themselves with cash that was borrowed. Carillion didn’t just borrow to build, they tried like many other companies to roll over their debt and borrow more to pay the existing debt. Many companies with high debt have been praying for inflation which would inflate away their debt but high inflation never seems to come. Inflation isn’t just rising prices, it is rising prices chasing rising wages. While fat-cat salaries have been rising, the wages of the ordinary worker, the hospital porter and the nurse, have been falling in real terms.

spivs and fat cats


How to make easy money? #finance #investments

The Bank of England left interest rates at 0.5% yesterday which was good news for people with mortgages but bad news for savers. This week, stock markets fell all around the world and President Trump’s bragging about how well the US stock market was doing came to an abrupt halt. So how do you make easy money in such a volatile environment? When the panic sets in, so does what might be termed ‘computer panic’. Traders become concerned and start selling and then a few stop losses, those automatic trades that are meant to stop losses when the price falls a little, all kick in and that causes the share price to fall even further. The market makers know this and they increase the spread just a little to make their cut even bigger. You can make easy money when this happens by buying on the artificially low and then selling when the high comes. This is difficult for small investors because we tend to get hit with extortionate dealing fees.

easy money


Money that you never spend #finance

I have written about discretionary income before, which is the money left over after you have paid for all the essentials like a place to live, food to eat and taxes! That is the money that you spend on all the luxuries that make life worth living. If you can double your discretionary income with income from investments or increase it by being a bit thrifty when buying the essentials, you can effectively double your standard of living. What is this money that you never spend?

money that you never spend


Keeping your nerve #finance #investments

There are times when you have trouble keeping your nerve when investing in the stock market. It can be volatile and the dealers and market makers all play their games. The companies are self-serving and often have little regard for small private investors. After last weeks disaster when Carillion went into liquidation I was hoping for some good news and this week didn’t go so well either.

keeping your nerve


Perceptions of risk #investments

Perceptions of risk changed this week with FTSE 250 companies now appearing to be a greater risk than before Carillion went into liquidation. The government, in my opinion, made a colossal mistake. They sold shares not long ago in Lloyd’s banking group because they believe in ‘privatisation’. Now they let Carillion fail because they believe in letting the market decide. God help us if Jacob Rees-Mogg ever reaches a position of power with his Conservative ideas and antiquated ideas based on Catholicism.

perceptions of risk


All that glitters #finance #investments

All that glitters is not gold, used to be a popular saying. It seems many people are attracted by anything that glitters these days and people are turning into magpies buying anything that glitters and frittering their money away.

all that glitters


Snow before Christmas #finance

Winter started early this year with snow before Christmas and so many people will have heftier winter bills for heating. The cost of Christmas could cause many people misery in January too. However, some companies are viewing the awful weather as a life saver. The bad weather has meant more cooked meals and so companies like Premier Foods should have increased sales and revenue. The AA might be getting more members signed up too.

snow before Christmas


The tree-shake and market maker #finance


a member of any of the bands of English workers who destroyed machinery, especially in cotton and woollen mills, which they believed was threatening their jobs (1811–16).

Luddites weren’t really against mechanisation. They were against low wages. The factory owners were keeping wages down because they needed high profits in order to mechanise and if they didn’t mechanise their competitors would and put them out of business. The answer to their dilemma,  of course, was to bring in investment from outside the company. We are now in a new era of mechanisation. The use of computer-controlled robots and artificial intelligence. Companies need investment and so the stock market is even more important now as in the early 19th century. Technology will tree-shake whole industries and some companies won’t make it.

Tree-shake is a term used by investors in the internet forums.


Beware the bubble #finance #investments

Sometimes an economic bubble will form and sometimes they are created purposely. Ponzi schemes are a type of bubble and they rely on greed but bubbles can also form because of shortages such as a property price bubble when housing or commercial property is in short supply. There is a property bubble in London and the south-east but the cause isn’t just a shortage. It is also higher incomes in the south-east compared to the rest of the UK.

large cap company investments creating a bubble?


Planning for 2018 #finance

Planning for 2018 will be difficult because there is so much uncertainty caused by Brexit. I will hope for the best and expect the worst! Another financial crash could wipe 30% off the value of the stock market. I’m too exposed to AIM companies so I would be hit worse, perhaps losing half my portfolio. I can survive that.

planning for 2018


Stress test, can you pass it? #finance

The Bank of England has set a stress test for Britain’s banks and advised that capital requirements should be sufficient to meet a crisis such as the one outlined. We too should ask if we can survive such a crisis or would we become bankrupt, lose our home or be unable to meet our obligations. How bad could things get?

stress test


Pundits and brokers #finance #investments

There are lots of pundits and brokers who will tell you to invest in all sorts of things. Everything from the FTSE 100 to Bitcoin. Should you listen to them? I think Bitcoin is a bubble that will eventually burst and many investment opportunities are scams. Anyone who calls you up offering an amazing opportunity is probably in a boiler room and is either offering something that is illegal or is on the borderline.

 investments - pundits and brokers


Discretionary income and profits #finance

We all have overheads, those essential things we have to buy before we can even begin to think about buying the luxuries. That money left for buying the luxuries and paying for Christmas treats and holidays is referred to as discretionary income. If your boss gives you a Christmas bonus, your discretionary income can soar. Small businesses have overheads. They have to pay rent, business rates and other bills and a small increase in turnover can mean a big increase in their discretionary income. Their discretionary income is the profit they take home to spend on their families.

discretionary income


Finance in focus #finance #investments

This week interest rates have been in focus with various pundits predicting an interest rate increase next week. There is no forward guidance and so it could go either way. As usual, the government and Bank of England add to uncertainty and the markets don’t like uncertainty but for many investors uncertainty brings opportunities. It is unfortunate that it is mostly parasitic day traders and shorters that get to benefit.

finance in focus


Looking forward to the future #finance #investments

I had another good week of investing with my stock market assets gaining 2%. Immupharma saw further gains and today they will cost you £1 a share and a bargain at that. The company has huge potential and the fact that they are preparing to gain FDA approval for Lupuzor could mean they are considering manufacturing the drug themselves. The company also has the expertise gained from the development of Lupuzor to develop other drugs for other diseases associated with the immune system. The share price has doubled in the last few months. Looking forward,  if it doubles again before the new year, I wouldn’t be surprised.

looking forward


Hitting the jackpot #investments

Some companies on the AIM market lose money for years and while they develop a new product or explore for oil. When there is progress the share price can soar but the prudent investor should invest less in this high risk companies and so it doesn’t usually mean fortunes are made. It is still quite exciting when share prices soar on good news, though and it is a little like hitting the jackpot.  That was the case this week when Immupharma soared by 25p following the end of a pivotal trial of its lupus drug.  To add to shareholder confidence, a major investor has decided to continue supporting the company.

Hitting the jackpot


Opportunities and risk #finance #investments

Personal finance and investing are about opportunities and risk. I look for investment opportunities and try to assess the risk. Life is about looking for opportunities. Different people look for different things but we all look for opportunities. My investments are up about 2% this month and so I’m quite happy with that but the AIM shares can soar upwards at any time.



Cash flow and other metrics #finance

If you have been following my finance posts you’ll know that my investments haven’t been doing so well over the past few months. Last week was much better and this week I’ve made a little progress. My finances as a whole are a fairly stable but I’m still delaying any major purchases until things are looking better. Changing my car this year did put a big hole in my bank balance but I don’t need to change it again for a few years as long as I look after it so I have time to save some money! I just have to keep proper accounts and watch my cash flow.

watching cash flow


Confidence and the market #finance #investments

It can be difficult having confidence that your investment choices are the right ones when things aren’t going well. These last few months I’ve seen my investments plummet. Carillion suffered a lack of confidence that saw their share price plummet and their shares shorted so much they had to scrap their dividend. The money saved from scrapping their dividend will hopefully be enough to ensure their survival. It will be difficult for them to raise more investment from the market or from the banks. No one wants to lend you money when you’re nearly broke!

 confidence is important


The long game #investments #finance

When we are investing or planning our financial future we have to look at the long game. We might make short-term losses on investments but if we did our research properly in the long-term we should get a good return. We are fallible and so we make mistakes and we can compensate for our mistakes by diversifying. One mistake I am regretting today is Monitise which went from being a fast growing company to a failing company almost overnight. A takeover bid usually means great returns for investors but in the case of Monitise it means I don’t lose all my investment and I have to accept losses.

The long game


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