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Risk and return #investments

The FTSE 100 is up this morning after some positive news from the US, but investors are still nervous. Private investors expect a real terms return on their investment that reflects the risk they are taking. 

Inflation is close to zero now and so investors expect lower returns, than when inflation is high. The market has crashed from the high not long ago when the FTSE 100 was over 7,000 so investors are looking for safety. Those well-known companies with large market capital are in favour over the small caps and the AIM market. That can fuel a bubble and that was what sent the FTSE 100 over 7,000.  Safe looking investments aren’t always as safe as they seem.

I’m still nervous and am regretting getting so exposed to the AIM market. There are signs that things could turn out well in the end, so I’m staying positive. Solo Oil could sign its GSA  (gas sales agreement) within 2 weeks which would send the share price soaring.

The pharmaceuticals could release some good news too and so I’m positive about Verona Pharma and Immupharma. Both have drugs that they are testing that look very promising.

The other two AIM companies are more worrying. Monitise has a technology that’s in demand but needs a new partner and I think they need to look at cross-border payments, rather than an app that allows friends to contribute to a kitty. Sending friends or family overseas money quickly and easily looks like a better use for the technology. PayPal could be a suitable partner for Monitise, but we shall see.

Graphene Nanochem has advanced technology too, but their investor relations isn’t good and they seem to have been pushing a low margin product. New technology in this sector should be high margin. They are now trying to move to higher margin products and we shall see what happens. A small investment as part of a larger portfolio is appropriate for this share.

The more popular shares like Tesco are making progress despite difficulties. Tesco is up over 2% today and I think investors see it as a bargain rather than as a safe harbour. RSA insurance is making progress, but I have learnt a valuable lesson. I should have sold when the price was high due to Zurich’s interest. Investing is a constant learning experience!

Debenhams and ITV are rising on positive sentiment. I think the former is under-priced and could hit 100p by the new year. ITV made an acquisition and so their profits will be up and that will be reflected in the share price.

The share price that should be up is Premier Foods. It has been rock bottom for some time and is well overdue for some good news. The advertising campaign is underway now and this is one I hope will soar when the Santa rally gets underway. They should be able to capitalise on the Christmas spirit and move more than just Christmas cake. We shall see! It’s 2 years now since they hit 180 and in that time they have reorganised, launched new products and paid down debt. The price today is just 35p.

That’s it for today, good luck with your investing. If you would like to subscribe to this blog just enter your email address in the space provided at the top of the sidebar. If you would like to write for A Zillion Ideas, send us an email, the email address is in the sidebar. You can also follow me on Twitter and get updates.

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