Political risks #finance
I used to have the odd afternoon betting on horses on Betfair and trying to not only place bets, but to lay bets too. Now I watch the stock market instead. Some would say I’m still gambling, but we gamble all the time anyway. Life has it’s risks and we have to avoid dark alleys, but not allow fear to stop us taking risks altogether. We have to be brave and live life.
The stock market is risky and you are risking part of your life savings perhaps or even your inheritance, so you have to consider the risks and avoid anything that looks like a ‘dark alley’.
This week there seemed to be more risks. The political debate last night on TV was about money and public investment. I own shares in Balfour Beatty, it HS2 goes ahead they could pick up a few contracts, but while the government is spending on that; they are not spending on other things. They don’t have an unlimited supply of money; even though they can ask the Bank of England to ‘print’ more. Balfour Beatty is picking up contracts as the government invests in the infrastructure, but some pharmaceuticals could be a better bet or even the banks who control a lot of the investment.
The political risks on the run up to the election led me to sell TSB and Lloyds banking groups. I have about 30% less invested, but I could have sold more if I believed the hype about Labour causing the economic crisis of the past few years. Yes, they failed to regulate enough, but the Tories were calling for even less regulation. No one foresaw what the problems at Lehman Brothers would cause. The leveraging of the banks and other companies should have been seen as a bubble waiting to burst. Empire building by RBS in retrospect would seem doomed to failure, but no politician stood up in parliament and even whispered a warning; let alone shout it from the roof tops.
A good company runs itself and paying CEO’s millions of pounds in salary and performance related pay doesn’t guarantee success. A good country by the same token should run itself and pandering to political ideology and following the teachings of some lunatic with a theory can lead to disaster. Do we need our financial industry regulated or can we leave it to the magic of ‘market forces’? There is no magic, we just have to keep calm and carry on, applying British common sense, not right wing ideology and not left wing ideology. We certainly need transparency in government and business so all stakeholders know what’s going on and can shout from the roof tops when things are going wrong. We should all assess the risks when it comes to the welfare of the country we live in and should all have an influence on policies.
You will have to decide in the coming weeks who to vote for at the General Election. Look for omissions and deceit by candidates, ask questions and assess the risks. One candidate in my constituency says he went to a West Midland university. His omission is that he went to expensive private schools and then went to the University of Warwick. His father was an immigrant who came here and built up a successful business. Where did he come from? What was his business? He doesn’t say, but his name is Ratner…
I shall watch the market and the election with interest and start reinvesting after the election, when the political risks will have probably changed. I own shares in Tesco, the police are being cut where I live. Many of those officers shop at Tesco. Nuff said…
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