Investments | Death or Glory!
Premier Foods went up for a third straight day on Tuesday, climbing 11.5 per cent to 17p after Investec Securities recommended the stock as a “death or glory” gamble. It has since fallen and is back at 16p but I’m happy with it’s progress. I bought at 4p last October and the “death or glory” description sums up my attitude not just to this investment, but to all my investments! Different people have different approaches to risk. Someone with a family to support would be more averse to risk than me. I only have myself to worry about and I take calculated risks. I have to admit, that it’s fun when it all goes right.
A good quote this week was that there is no such thing as a bad day on the stock market. It was going down yesterday, but was it a bad day? Yes, the value of my portfolio went down after the gains earlier in the week, but there were opportunities. I have a watch list and a couple of prices hit my target price to buy. I didn’t buy! I read the annual report of one of the companies to get some idea why the price had dropped and tried to establish why the other one was dropping. I think it was because the market was down generally but there was a little bad news affecting both companies. Bad news doesn’t trigger a buy, but a bear market; the whole market down, can trigger a buy in my mind. I’m monitoring both prices today and I might buy into a pharmaceutical company, but the other company as attractive as I think it is, will probably have to drop further.
When you are considering investments, you have to look at trying to get a return that is at least equal to inflation or you’re actually losing money as it’s devalued. If you can beat the inflation rate then you’re making money. I think this is a good time to buy shares on the stock market as we hope to recover from recession. I think Premier Foods for example will make about 30p before the end of the year and could go much higher if the economy picks up.
If interest rates go high as they have in the past and the economy gets back to normal, then perhaps a different strategy will be called for. Over the past ten years as interest rates have been cut to historic lows, bond prices have risen giving good returns and gold prices have risen; this is worth remembering as economies go through boom and bust cycles. If we enter a boom and property prices soar again; should we bear in mind that a bust can be around the corner if the property market turns into a bubble?
This recession or credit crunch, call it what you will, has prompted innovation and spurred on peer to peer lending and to a lesser extent even social media. I am a fan of Zopa and that can be a useful way to invest. It’s not quite “death or glory” but provides better returns than the banks for little extra risk.
There are more amazing blogs on my other website, please visit A Zillion Ideas and help me make it a success.
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- Premier Foods saved by loan deal (independent.co.uk)