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Perceptions of risk #investments

Perceptions of risk changed this week with FTSE 250 companies now appearing to be a greater risk than before Carillion went into liquidation. The government, in my opinion, made a colossal mistake. They sold shares not long ago in Lloyd’s banking group because they believe in ‘privatisation’. Now they let Carillion fail because they believe in letting the market decide. God help us if Jacob Rees-Mogg ever reaches a position of power with his Conservative ideas and antiquated ideas based on Catholicism.

perceptions of risk

21st-century

We’re in the 21st-century and there is no room for Dickensian beliefs in the modern world. We are entering the era of artificial intelligence and robots and investment will be essential but many believe that investment should only come from the wealthy. They still refuse to expand the investor base by making it easier for the small investor.

Perceptions of risk

My own perceptions of risk have changed and I no longer see the FTSE 100 or FTSE 250 as relatively safe compared to the AIM market. I know the AIM market is very risky but the rewards can be high when we back a winner. This week I lost all my investment in Carillion but made an even bigger return on Immupharma which continues to rise on news of the success of its phase 3 trial. Investors must now expect higher returns because risks are higher due to the government’s failure to regulate and failure to take decisive action in the event of a major company getting into difficulty. Government failure doesn’t just mean perceptions of risk have changed, the actual risk has increased.

Actual risk

The failure of the government concerning Carillion and other company failures such as BHS adds to their failure to resolve the EU problems by negotiation. Their threat to have a referendum backfired spectacularly when the vote went in favour of Brexit. Considering all the lies spread in favour of Brexit and the obvious manipulation of the voting, that too must be seen as a massive failure. Actual risks for investors have increased because of government failure and incompetence.

This week

This week, apart from Carillion going bust, Immupharma continued its rise to ease the pain of the Carillion losses. Premier Foods gained and then dropped back but we are waiting for their results and I am optimistic following their improved marketing over Christmas. The rumour mill seems to think they are going to sell Bachelors soups for £200m which will help pay down debt. The AA fell on poor results but they too are selling off assets to concentrate on the core business of breakdowns and insurance. Tesco fell back a little on its Christmas results and there was more bad publicity over rotten turkeys and alterations to their club card promotions. Solo Oil made a little progress after they reported better than expected gas sales from the Ruvuma well. Watch Solo, I think we could have some good news soon. The Market makers are suppressing trade with a huge spread so they are probably of the same opinion.

Overall, I’m quite optimistic looking forward to the rest of 2018. There is a lot to be concerned about but I have some diversity in my portfolio. I see the AIM companies as doing quite well and I’m optimistic about Lloyd’s and Tesco. After a long wait, Premier Foods could go back in the blue this year if they continue with the improved marketing.

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