Never put all your eggs into one basket
The stock market is closed today after a 4 day week that saw a lot of nervousness. Geopolitical risks seemed to be heightened by tensions between the EU and the UK and the US under the leadership of Donald Trump seems to lack direction. The Federal Reserve plans to increase interest rates, Trump wants them to stay low. The United States needs its own people to save and invest. They can’t rely on more inward investment from China and so a more regulated and less risky financial system coupled with higher interest rates would seem to make sense. Meanwhile, we small investors need to avoid putting all our eggs into one basket by diversifying.
On the markets, investors seem cautious but the FTSE 100 is still quite high. You have to be very selective if you’re looking for bargains. Tesco fell this week despite increased profits and so I think the drop is overdone. Lloyd’s Banking Group also dropped this week and seems out of favour. I think it is undervalued now and with branch closures scheduled their profits next year should allow them to increase the dividend. Investors are chasing greater returns and many are even looking at the AIM Market.
The AIM market
Solo Oil dropped again this week and no one quite knows whether their investment in Helium was a good move or not. They certainly need to engage with investors better and inspire confidence. The high of 0.8 was perhaps over-confident but now we’re down to 0.48. Immupharma made some gains this week so that evened out my gains and losses. That is the reason for diversifying; never put all your eggs in one basket!
eggs in one basket
Perhaps being Easter we can learn and remember the dangers of putting all your eggs in one basket and the reduced risk that diversification brings. It is a good idea, not only to invest in different companies, but also different sectors and different markets. We can invest short-term, medium term and long-term too. I bought Solo Oil for 0.3p and I think that is a long-term investment that will go up in stages. It recently went from 0.28 right up to 0.8 and dropped back to 0.48. The next bit of good news could send it over a penny or even higher. The chairman of the company predicted a penny this year but that was before the helium investment. Ntorya 2 could send it north of a penny if that began producing gas and Solo has lots more irons in the fire that could come good too.
I have reduced my portfolio because Brexit has slowed growth and fuelled inflation but that could mean we find bargains. I’ll be watching Carillion this week. They continue to pick up lucrative contracts and will be paying a good dividend this year. It isn’t an exciting company but until we get this Brexit silliness out of the way, we don’t really need too much excitement.
Happy Easter to everyone, I hope you get chocolate eggs but don’t put those all in one basket either! If you would like to subscribe to my blog just enter your email address at the top of the sidebar. You can also follow me on Twitter or follow the links on my Facebook page.