Surviving the market turmoil #investments
The all share index on the London stock market is down nearly 4% this week, which is a lot for small private investors. There are some bargains to be had but falling markets have had a devastating effect on the value of portfolios in recent months. We have to think long term and consider buying.
Tesco has been one share price to lose value over the past few months and went to a low of 137 yesterday compared to a high of 252.5 last April. That is a huge drop in 9 months, so are they worth buying now? They are up to 146.7 this morning, a rise of over 5%, so they were definitely a bargain yesterday. Are these fluctuations ‘market corrections’ or blind panic on the part of city traders? Private investors can buy low when sentiment overcomes common sense in the city.
Will the oil price drop even further? It would seem that shares in oil companies are at bargain basement prices too. It might be some time before the oil price goes up again, but it seems likely it will eventually. The price of natural gas hasn’t fallen quite as much so buying shares in a company producing gas as well as oil might be a good long term investment. Royal Dutch shell (B) might be worth considering and they pay a dividend too. I’ll stick with Solo Oil, which should soar if and when they start producing. They have plays in the UK, Isle of Wight and Tanzania. I think there is a risk, but worth taking.
Markets were in turmoil this week, so George Osborne had to make a speech and make things worse. Can’t someone tell him that when the chip pan is on fire, you don’t pour water on it! He did mention the Bank of England and the prospect of interest rates creeping up. An interest rate rise is likely to be small, but will be a step in the right direction as far as stabilising the housing market is concerned. Too much money is going into inflating the bubble that is the London housing market.
What am I watching? Poundland has ambitious plans and has made a couple of acquisitions buying 99p stores and Family Bargain stores which they will do a multi-priced trial beginning in April. Profits will be lower this year because of acquisition costs, but in the long term, they look good.
I’m watching banks too, Barclays and Lloyds in particular. I think both could go up 20% especially if there is an interest rate rise.
RSA insurance will be hit again by the floods, but it seems to be weathering the storm better this time around. It’s a shame the Zurich takeover didn’t go through, but there are always predators lurking in the background.
I’m more optimistic now about Premier Foods, they are rumoured to have had a good Christmas. Mr Kipling seems to have gone down well overseas over the festive period.
That’s all for this week, if you’re having a hard time then Zopa could be an investment consideration, click my link in the sidebar. You can also use the link in the sidebar to follow this blog or you can follow me on Twitter for updates. You can find more on my Facebook page.