Have we hit bottom? #investments
The FTSE 100 is up this morning but is still under 6000, a big drop from last year’s high of over 7000. Is this the bottom? I see no signs of the economy being managed any better and if share prices go lower we will see acquisitions. A few companies have already gone to overseas buyers.
This week George Osborne decided to delay selling more Lloyds shares and the sale to the public. That announcement came after I had bought Lloyds and the share price fell. I was not pleased. Every time Gideon opens his mouth I lose money.
Oil companies outside of the gulf states have huge debts and the oil price is too low for many to make a profit. The fracking companies in the United States are particularly vulnerable. The market is awash with oil and so the weakest companies will go to the wall and not be able to pay back the banks. It sounds a little like the sub prime crisis all over again. The global economy is still suffering from the Lehman Brothers collapse and it could be about to start all over again. Many countries like Greece still haven’t recovered and have had huge problems. In the UK, the government is selling off anything that isn’t nailed down. Most of the economic policy in the UK is simply based on dogma rather than sound economics. The roads in the UK are jammed and there isn’t enough housing. These are two problems that need urgent attention. The government is making more people homeless and more migrants coming in is putting a strain not only on housing but education and health services too.
The world is in debt to the super rich and to the pension funds that feather bed the middle classes in old age. The pension funds could easily become the next crisis as they too go bankrupt.
Hopefully, the stock market has hit bottom. If it starts to recover that will help not only pension funds but all investors who might then be more willing to invest for growth. We really need small investors to do better because they will diversify and support smaller companies too. The big global companies that have a virtual monopoly like Google, Amazon, Facebook and Microsoft are bad for the world economy because they are not challenged by competitors. They are not challenged by regulators either or even government revenue services.
I think the market will decide in the end and in the short term there will be a greater demand for gold, but in the near future, the oil price will start creeping up as fracking is seen as uncompetitive.
I intend to sit tight and watch for stock market bargains. Many companies like the banks suffered from a lack of regulation and were unable to regulate themselves. Even the accounting scandal at Tesco was a lack of regulation. Don’t they have their accounts checked by an outside auditor? The Conservative mantra is no regulation but in practice those law makers while making laws that ordinary people have to abide by also need to make rules that global commerce has to abide by too.
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