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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

Staying healthy

It is important to keep a healthy bank balance. It gives the bank confidence in you. Once you slip into overdraft or start living on loans and credit then the bank rightly view you as more of a risk. I have had the bank phone me and ask if I need a loan for anything. The car I bought in May, isn’t going to impress people, but I didn’t borrow to pay for it. I’m not really into status symbols. When I’m doing well on the stock market, I tend to spend a bit more money and just lately I have spent less!

Thinking long-term

I think long-term and even though I haven’t been doing so well with my investments for the past few months I can now see signs that things will be fine in the long-term. My AIM shares are the long-term bets. The pharma companies are both testing new and exciting drugs and they have both released a little good news this week and tests are progressing. I’ve waited patiently for Verona Pharma to come good and I’m at break even now and I see it going into profit in the coming weeks. When do I sell? Normally I hope for a 10% plus return but this is different. I have waited a long time and took additional risks and I expect the share price to soar when the drug has passed final testing. The company should be transformed. We could easily see the share price triple. It is the same story with Immupharma and they have made gains this week too. I think immupharma might come good later but the gains could be much greater.

Solo Oil

Still looking at the AIM market, there was good news this week for Solo Oil. The oil and gas reserves in Tanzania are bigger than was previously thought and there was good news from Solo’s investment in the UK find too. The worry is that the board has expertise in oil but doesn’t always make great financial decisions. I hope when the share price soars they go for a rights issue to get the extra capital they need to invest in development. When the share price hits about 20p, they can ask investors for more money. I’m expecting more positive news from Solo soon, maybe next week.

Premier Foods

Premier Foods is still under priced and they too are a long-term bet. They are sorting things out and prospects look better and that has been reflected in the upward price movement this week. The directors paid an average of 80p for their shares at the time of the rights issue and they bought more shares last month at close to 40p. That should tell you something. I think Gavin Darby with over 5 million shares is hoping for a nice retirement fund.

Confidence

Overall, my confidence in low. The UK economy is stagnating and could drop into recession. Higher interest rates could be on the cards, too. I am watching a few of my holdings because I can see either mergers or takeovers coming. That could apply to Debenhams, Carillion or ITV. It doesn’t seem long since the AA split from Saga now they are struggling and seem burdened with debt. They also had a boardroom problem recently and had to get rid of their chairman. They need to act quickly to protect their reputation. Of all the breakdown services the AA is the one people trust and they can tag insurances services onto membership. My car insurance with the AA was increased 25% this year. I changed provider and breakdown. A 25% increase is unacceptable. You don’t abuse your customers like that. As an investor, I’ll watch the AA with interest.

That’s it for this week. I had quite a good week with the value of my portfolio recovering about 2%. I hope the trend continues, next week!

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