Politics and money #investments
Politics have been depressing the stock markets this week, with the Greek debt crisis lingering on. It seems the credit crunch that followed the Lehman’s Brothers collapse just goes on and on. The problems seem systemic, markets can’t decide and adjust economies.
The governments have the power to regulate economies and politics will always affect markets. The austerity we see in the UK and other places means companies serving the public sector are going to see falls in sales and other problems. We have to bear that in mind when we invest.
Politics and money
Politics also affects interest rates and despite ‘forward guidance’ on interest rates, we are still none the wiser about when central banks might increase rates. Insurance companies and pension funds put their money into government bonds and so they are losing money. I would have thought they could find better ways to invest the money.
Tesco seems to be a favourite with investors. Their sales are still falling, but they have scrapped some grandiose schemes for new stores. They are getting back to what they should be doing, serving customers. They have stopped some coupons as a way of marketing products and are changing the way their stores operate. Tesco shares are up about 3% this morning after a trading statement was issued early this morning.
My recent investments in the AIM market were Verona Pharma which is up, Immupharma which is down and Monitise is another one falling. At the same time I bought Cable and Wireless (CWC) which is up and so overall it’s not too bad. I also have Solo Oil which lost ground this week and Graphene Nanochem in the AIM market. I won’t be investing in the AIM market again for a while. I think all the markets will pick up when the crisis in Greece is sorted out. Politics is depressing all the markets. The AIM market has companies looking for oil, new drugs and new technology. Their value is based upon their future prospects and on investor confidence. Confident is low now and is affecting all the markets, even the FTSE 100.
A lot of shares look under priced at the moment and so when the political turmoil surrounding the economy of Greece subsides some share prices will shoot up. I think Premier Foods will be one, as brokers are giving it a better rating. I think market makers have increased spreads to take account of increased risk and when the risk is lower, spreads will narrow and stimulate trading. Politics and money are inextricably linked.
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