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The economic damage of the pandemic. #FinanceFriday

The economic damage that has been done by the pandemic around the world is significant, far worse than the crash of 2008. In 2008 it was banks that took most of the damage but this time around there are few companies that are not affected. The ones suffering the most loss of trade are the airlines and travel industry. Pubs and brewers took a hit but the pubs are open again with restrictions, but for how long? The students will be back at university soon and that will include international students, so as has happened with schools, we can expect more outbreaks. The new rule that bans gatherings of more than 6 people will hopefully ensure no student parties and put a stop to raves and house parties. It will take policing, of course, so hopefully, the police will be more active in stopping large gatherings.

economic damage

Investment

Companies need investment and there was a shift in investment from gold and back into the stock market but the past few days have seen falls in the stock market and the spot price for gold go up as once again investors seek safe harbours. Oil is still under $40 a barrel and there is little sign of it appreciating above $40. Gold, once again, went through the £1500 an ounce barrier yesterday and although it’s dropped back a little today remains firmly over £1500 an ounce. Investors are still wary and looking for safety. So where can we small investors put our money? Lloyds Banking Group went to 30p in the 2008 recession and that was when I bought in. Today it’s down to just over 26p and so well worth a punt. They are closing more branches and have plans to make more people redundant. The government secured loans that Lloyds are handing out could cause them problems in the future but it is a large company and should be able to weather this storm. Last time, they had PPI claims to deal with as well as the recession, they are now in a much better position. I see all the banks as being worth a punt. Barclay’s didn’t need government help in 2008 and came through that recession. I think Barclay’s’ share a still cheap at just over 103.

Steer clear

I would steer clear of the travel industry and the entertainment industry is likely to have difficulties for some time to come. I do see the oil price rising next year which will be good for the likes of Shell and BP. I am considering buying a few shares in RDSB. The food industry should continue to do well. The ‘eat out to help out’ scheme has ended and I expect people to go back to eating at home more until they feel safe.

Christmas

Christmas is a big event that could be severely disrupted. Will people buy fewer gifts and will we still celebrate with turkey and all the trimmings? We may not be allowed to visit each other’s homes and the idiots who ignore the advice could very well create outbreaks into the new year. If Christmas isn’t cancelled it could spell disaster. Many will still buy gifts but perhaps not celebrate Christmas. Online shopping could receive a boost from a switch to buying gifts online. The big winners could be online retailers like Amazon. I do hold Amazon on eToro but that isn’t going to make me rich! Overall, I think people will save more and spend less this Christmas. Spending patterns will change too and there will be more online spending.

That’s all for this week. I see more economic problems ahead so save and invest more and spend less! There are more rainy days to come!

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