Finance Friday: investors and speculators.
There are a lot of different types of investments. Labour this week announced a policy that would stop some ‘buy to let’ investments. I think borrowing money cheap to buy run down properties to rent out to desperate people is simply being a parasite. We need proper investment in housing, not get rich quick speculators.
There is a place for people who speculate on high risk ventures. I bought shares in Solo Oil and they are a small oil company investing in exploration for oil in a few locations. The investors have been excited recently because they are drilling at Horse Hill near Gatwick airport. The shares will rocket if they actually find oil or gas, but we could just as easily lose all our money. The share price dropped dramatically yesterday as some institutional investors took their profits. In theory, I have doubled my money on that investment, in practice I’ve made nothing until I actually sell the shares. I’ll hold on and enjoy the bit of excitement of prospecting for the black gold!
New technology is a bit speculative too. I did technology in college and so know a bit about it. There has been lots of speculation about graphene in recent years and how it could transform technology. I looked into it a bit and decided to invest in Graphene Nanotech. They make special lubricants for the oil industry and have been picking up some good contracts. Today they issued an RNS ( Regulatory News Service) telling investors they have entered into an agreements to try to develop a graphene enhanced lithium-ion battery for buses and perhaps cars. The interesting bit of that RNS was the statement that such a battery could hold 10X as much charge as the current batteries and allow buses to travel up to 200 Km before charging. That is a game changer and could have huge applications. That could change the energy industry because storage of energy has always been a problem. Graphene NanoChem also has a cheaper and competitive way of making graphene. These are amazing claims and such technology could be sometime in the future, so the share price jumped just 4.88% on the news. If they manage to get the batteries working next year and a few buses on the road, it could be exciting.
The stock market did great for me in September, but terrible for the past two weeks. I’m pleased to say it’s picking up a little today. The FTSE 100 is up 0.96% and the AIM market over 1%. I take risks and so I’m up nearly 2% so far and it’s not 10am yet. Graphene NanoChem isn’t doing quite so well, because the spread has increased. What do market makers and financiers know about Li-ion batteries? This is where the posh boys in the city lose out…
It doesn’t take a really big rise on the stock market for my return on investments to double or halve. The return dropped to nearly zero in recent weeks, but is now going up quickly. I think long term, when things look bad I do nothing, just wait for the upside. Things can look bad with the Eurozone economy in bad shape, Russia having problems because of sanctions, Islamic state unnerving investors and Ebola seeming to be a threat too. When the city panics at bad news, that is the time to go through your watch list and see if there is anything worth buying. The institutional investors will run for safe harbours, even gold has gone up this week. The brave will pick up the less safe assets on the cheap. Tesco was one seen as a safe company, now it has dropped to a realistic price and is worth watching.
The political future in the UK looks uncertain. The Tories are bound to lose the election in May next year and the Lib Dems will be in the wilderness for a long time. Labour is a bit disorganised and The two Ed’s, Miliband and Balls don’t really inspire confidence. Labour are less isolationist than the Tories, so can do deals with Europe and other countries more easily. How will political change effect investments? It’s hard to say, but I think I will probably do better with a Labour government that is a bit right of centre, than a extreme right Tory government hell bend on following out dated ideologies. They’ll be bringing back workhouses next… There could be a Conukip government of course, that would be a nightmare…
Remember, I don’t give advice or tips on investments. I only tell you what I invest in and why. What do you think? Please share your thoughts in the comments box. You can also follow me on Twitter.