Investment decisions for small investors #investments
Regular readers will know that I write about being thrifty on Thursdays with the exception of yesterday when I didn’t have time to write a post. In January we shop around less because we have less money to shop with. It is a frugal month for most people after the excesses of Christmas. I actually spent more on my credit card so have an unusually large bill next month. This month has been a month of making investment decisions.
Triggering article 50
Yes, we have the parliamentary vote coming soon that will trigger article 50 and begin the process of the United Kingdom leaving the European Union. The market doesn’t like uncertainty and so this is likely to make the market even more volatile. We can take advantage of volatility, but I wanted to reduce my risk because I am considering changing my car and needed a little more cash and less investment risk at this time. It seemed like a good time to sell RSA last month and this month I wanted to reduce my investments further and looked selling Taylor Wimpey and Tesco this week. I decided to reluctantly sell Taylor Wimpey. TW could fall again if the market gets really anxious about article 50 and Brexit. I can buy back in then, for the third time. Tesco has been falling and I decided to hold which turned out to be a wise move in the light of today’s merger talks. Tesco is up more than 9% this morning. I think Tesco’s aim seems to be to move more into the supply chain side and use its capital to consolidate its position in the market instead of expanding the retail operation. It has improved staff training and made shopping in Tesco a better experience.
Immupharma is another share price on the rise this morning gaining over 7%. The trials for their Lupazor drug for lupus treatment have reached another important stage. Despite this rise, I think this company is still a long-term investment and could become a takeover target at some stage in the testing of Lupazor.
When we make investment decisions we have to think quantitatively as well as about the quality of the company. So the amount I invest in these small companies is about half what I would invest in a large company like Tesco. That makes for more diversification. The upside on both Immupharma and Verona Pharma could be huge in the long-term and I have done the research on both companies and their innovative new drugs.
For the small investor, political risks play an important part in the volatility of the stock market but there are many other factors. The Tesco merger is driven by a more competitive environment. The pharmaceuticals are driven by a desire to achieve an aim which is a new drug. Solo Oil has been making progress based on an aim to find more gas and oil in Tanzania. We have to look at what these individual companies are doing and assess the risks but also judge whether they will be successful or if they will fail in their endeavours. Some of them will succeed and we as investors will succeed with them and some will fail but if we invest in a diverse way we will still be successful overall.
As always, do your own research and make your own decisions. If you would like to subscribe to this blog and read more ideas on a diverse range of subjects just enter your email address at the top of the sidebar to receive an email each time I post. You can also follow me on Twitter for updates or click like on my Facebook page.