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Predicting the future #finance #investments

Investors are the experts when it comes to predicting the future but can still be taken by surprise by political events. Brexit wasn’t exactly a surprise but many investors hoped the remain side would win. We now have the triggering of article 50 to look forward to which could trash the markets yet again.

predicting the future

Government

While I’m not a fan of the Conservatives, the government does look reasonably stable at the moment. Hopefully, Teresa May will keep it that way, no one likes extremism and uncertainty. If she inspires confidence in the UK the markets will continue to recover. Any crazy policies like those favoured by Osborne and Iain Duncan Smith would be disastrous right now.

The stock market

The market seems nervous this week but fairly stable, there hasn’t really been much volatility which we hope will last. The share prices of well-known names have ticked up a little this week, but Tesco, the AA, ITV and Debenhams still seem underpriced to me. I’m pleased to see RSA insurance being upgraded by brokers and the share price has improved a lot since the Brexit vote.

AIM

I’m watching a few companies on the AIM market. I’m still waiting for Solo Oil to announce that they have cash inflows from gas sales which should boost their share price considerably. Verona Pharma has made progress without any announcements and Immupharma has a lot of upside potential.

Quantitative Easing

I think the cash from quantitative easing combined with the interest rate cut will give the already inflated south-east housing market a boost but that is about all. It is a short-term measure akin to a plaster on a gaping wound. It will increase demand but without a commensurate increase in supply and so will drive house price inflation. The Bank of England are predicting a general increase in inflation to 2% which could be the average but I expect food and fuel bills to be hit hardest.

Predicting the future

If I were predicting the future I would expect the north-south divide to deepen and the gap between rich and poor to widen. While the introduction of the so-called ‘living wage’ is a step in the right direction it doesn’t really go far enough to close that gulf between the hospital cleaner on £7 an hour and the chief executive on ten times as much.

That’s all for this week, if you would like to follow this blog just enter your email address at the top of the sidebar or follow me on Twitter for updates. You can find more ideas on my Facebook page.

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