Sometimes it is the whole market that crashes and sometimes it is one or two share prices. To limit the damage, we need to diversify and have some investments not associated with the market. Then a big drop in the part of your portfolio that is invested in the stock market isn’t quite so damaging. I have an investment in peer-to-peer lending through Zopa. Surviving a crash emotionally is a different matter. People get excited about making money and upset when they lose money but you can get used to seeing it as numbers on paper or on a computer screen. There has been a lot of excitement on the forums recently about Solo Oil and the price soared from around 0.3 up to 0.8 more than doubling the value of my investment and then this week the news from NT2 wasn’t quite what some investors expected and the market makers slashed the price.
Solo Oil isn’t the only stock in my portfolio but it is the one I’ve been watching this week. It has soared from 0.42 to 0.53 (BID) since last Friday. The spread is still ridiculously high at 7.55%. The games market makers play! They have triggered a lot of stop-losses this week and stopped the games of some day traders.
Deciding when to buy and sell on the stock market can be difficult. Some investors operate stop losses but those aren’t foolproof especially on AIM. Market makers often reduce the bid price by a few percent with the intention of triggering stop losses. It seems to be a common practice on the AIM.
I don’t have much news this week except for Solo Oil which made some progress as we await news of Ntorya 2. That well was spudded last month and I thought we might have news before now. Private investors are positive and more people are buying than selling. There are inevitably a few who bought when the shares were at the bottom who are taking their profits.
I’m watching interest rates around the world. It seems the Federal Reserve will be the first to normalise interest rates. It could be as early as next month but many pundits are betting on December. That could be the trigger for other central banks to raise their rates too. It would certainly have an effect on the value of the US dollar as more money would be invested in the US as international investors look for better returns on their funds. That, in turn, would have a negative effect on other currencies including the GBP.
It seems likely that Britain will stay in the European Union but the uncertainty is depressing the stock market. We could see a surge of confidence once the referendum is over with. The big loser if Britain does leave the EU would be the City of London because they make huge amounts of money from Europe.
In life, we always have uncertainty and some periods are more uncertain than others. Most people try to avoid drama and want a quiet life. We want certainty in an uncertain world. It is the same when we are investing our money, we want certainty and stability but politics and religion make for constant uncertainty. Today, it is the referendum that makes markets jittery in the UK, but many problems around the world add to the uncertainty. (more…)
Oil underpins the global economy and so a low oil price should be good for the global economy. However, the global economy is out of balance and being manipulated. The global economy should be a free market but it is no such thing. It is a network of trade deals, monopolies and cartels. (more…)
This week the offer for Premier Foods by McCormick was withdrawn but the offer of 65p a share did show the hidden value in the company. It seems Nissin is still increasing its holding in the company and their joint venture seems a good deal for both parties. Premier’s share price still plummeted down to 42.5. This is still better than it was before the offer. (more…)
Market risk changes constantly. Economic downturns, terrorist risk, perceived risks by rating agencies and political risk all weighs on sentiment. The sentiment that drives buying and selling in the market. (more…)
Market makers seem to trade with no goal except to make money. On the AIM market, they often increase spreads to as much as 20% for no apparent reason. Trying to figure out what they were doing this week was a challenge as usual. (more…)
The value of money used to be determined by the gold standard. Now we have ‘fiat’ money, value seems to be determined by confidence and sentiment. The way the global economy works seems so strange to me. The price of things we are told is determined by supply and demand. (more…)
When you’re investing in the stock market there are always political and global risks. Will the UK leave the European Union? It could affect trade and so it is a risk. The refugee crisis and the military action in Syria is a risk. As one risk disappears the politicians create another risk, this leads to a volatile market. You can lose money in a volatile market and you can make money. (more…)
This week I’ve been following the progress of the oil well at Horse Hill near Gatwick which has been flow-tested with good results. It’s producing about 450 barrels a day which is good for all the small companies involved. For Solo Oil, this is another investment to bring in revenue. (more…)
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. (more…)
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. (more…)
We have seen the stock market fall from over 7,000 to under 6000, is the carnage over? I think to call it a crash is an exaggeration, it’s really a market correction with a sprinkling of panic. (more…)
The stock market has been dropping since June and dropped from a high of over 7,000 in May to a low of under 6,000 this week. It dropped below 6,000 last month too and then recovered, will it stay over 6,000 now? (more…)
I won’t pretend to be an expert on the world economy, but there does appear to be bubbles and cycles. Cycles when the Chinese Yuan is strong and then a cycle when the Yuan is weak. Do these cycles just happen or are they engineered by governments? The answer this week, was the value of the Yuan being cut by the Chinese government. Bubbles too can be engineered by governments, especially property bubbles, like we see in London now. (more…)
It was another boring week watching the stock market. The FTSE 100 is still down at 6744.47, much lower than it’s high of 7122.74. I think it’s unlikely to recover until we have some good news from Europe and Greece in particular. Austerity seems to be stifling international trade. (more…)
Peaks and troughs
Day traders in the City of London watch for the peaks and troughs in share prices, selling on the peaks and buying on the troughs. They keep the market stable, but they also sell on bad news and buy on good news. (more…)
Market makers are often the topic of discussion on the boards of investment forums. They are often blamed for all sorts of things! The London stock exchange has members who are official market makers and guarantee to trade in certain stocks. (more…)
The London stock market still looks shaky this week with political uncertainty making traders and investors nervous. I’m old enough to remember a few governments and so although cautious, I’m not too worried. Last week, I lost about 2% on my portfolio, but gained this week. (more…)
I wrote about the news of oil in the Weald basin last week and how that was affecting the share price of the companies involved. The statement about 100 billion barrels of oil, certainly ramped up prices, but they dropped dramatically again this week! Solo Oil hit 0.71, but is back at 0.55 today. (more…)