I have been asked to give a quick sketch of my thoughts on various matters - the economy, property, commodities, the markets, IPO's and even SPAC's.
Economy – to hell in a handcart – obviously it has never been so easy for the country to borrow shed loads of cash – but just to sort out a Chinese ravaged UK economy, it has not worked so far. And thank goodness we are going to cut Foreign Aid.
Can you imagine popping in to see your bank manager and asking him for a £1m loan. He would ask for what?
Your reply could have been to support Chinese prisons and cinemas, To help fund an impoverished country spending £1.3bn on a space rocket. To help an African President build a fabulous palace for himself.
Or to fund an Ethiopian Spice Girls wannabe act, or paint a bus shelter in St Kitts, or to fund an education system in one country where they cannot even trace 500 'teachers' ever having existed, or or or the list is endless.
We all know what the bank manager would say!
Covid-19 and Lockdown 2 – I have to say that I would certainly not like to have been in Boris’s shoes this year.
A shed load of experts swanning around him and reading out facts and figures from Wikipedia – very scaring.
Even so I believe that the British public should totally adhere to the restrictions as they are laid down, then and only then do I feel that we will help to decrease the Wuhan-constructed virus.
Property prices – I see property prices continuing to edge higher over the next few months, talking to estate agents it has never been so easy to sell house as it at the present – but I do not trust this continue. When the Stamp Duty reductions comes off in March next year, I do feel that prices will start to stall, then ease back from the sudden euphoria of the last few months.
Furthermore, banks and building societies will start to define even stricter criteria, while they make considerable profits borrowing cheap (almost giveaway) money in the markets, to lend out at non-competitive rates.
Oil – I feel that the barrel price will hover around the $30-$50 range. It may only be through absolute market aberrations if the price shift above the $50-$70 levels.
This may persist for another year or so as World economies recover and national oil corporations ease back on their production rates.
The very top of the market was marked when Aramco dumped 5% of its equity on poor investors a couple of years ago.
Gold – it was inevitable that the price, now $1855, would fall back from the early August highs above $2030 an ounce.
I have been a very long-time gold fan but feel that the euphoria has justifiably slowed down.
It could well rise above the $2000, then $2150 levels, but I would expect that to be caused by some economic or military drama.
Silver – the gold silver ratio currently sees the price holding steady.
Having doubled from its March low of $12.4 to $28.5 in early August, the subsequent easing back to $24 suggests that a further fall could occur.
But, of course, the correlation with gold is the important element for consideration.
Sterling – will this weaken upon a ‘no deal’ break with the EU or will it strengthen?
I abhor the fact that Edward Heath gave away our fishing rights so many decades ago and now our fishing quotas are held by Icelandic based fishing fleets.
Boris can not afford to be so weak in the face of the EU pressure, from an organisation that has never been able to rule off its own books of account for the last two decades.
We were a cash cow for the EU lazy brigade, but we should not be so in the future. Independence should be a strengthening process for the country, with or without Scotland.
Euro – in the last five years the Pound against the Euro has weakened from 1.43 to the current 1.11 – directly reflecting the UK indecision and lack of balls in negotiating.
Hopefully that could see a strengthening in due course. We still have loads of products that the EU needs to import and they have an awful lot of cars to sell us.
Dollar – from 1.53 five years ago the current rate of 1.32 is not so bad, after having touched 1.16 in mid-March.
Will Biden see sense in being friendly to us in the UK? The dollar will reflect his new government’s strategies.
Bitcoin – I can not bring myself to ever consider this ‘currency’ as being legitimate – there is so much ‘spoofing’ and ‘conning’ that is part of the existence of gambling counter – I will leave others to become exorbitantly rich from trading such a non-tactile element.
Dow Jones – now at around the 29,500 level, almost double the figure of five years ago, it is actually showing that it is not necessarily only a once-yellow now grey-haired Trump that creates such a rally.
Biden’s imminent Presidency could well drive the Dow over 30,000 and up to 32,500 over the next couple of years – with the markets reacting well to his strong hand in coping with the Covid-19 crisis that Trump has continually denied.
FTSE 100 – now we are trading the FTSE between the 4890 to 7690 range of the last three years – stuck in the middle of that range currently.
I do feel that we will see it edging very much higher in 2021, as the UK does actually start to show economic recovery that is driven by commerce and industry and not just a weight of borrowed money being thrown its way.
Value investing versus the Tech Stocks – considering the number of company profiles that I have written over the last few decades one would expect me perhaps to be a technophile – but I am not.
I obviously enjoy the benefits of our new technologies, but I do not understand them – that is my age showing.
However, I love widgets and companies making them, I love high consumable volume businesses, and of course my favourite is Annual Recurring Revenues (which is my only concession to technology stocks).
I love seeking out good asset businesses, with basic but necessary product lines – food, packaging, engineering, even building products.
In those businesses I can see ‘value’, potential sales and profits.
Two stocks that I like particularly are in the waste materials sector – Renewi (RWI) and Augean (AUG) – jokes about going through the motions might be applied – even so these two companies are basic but necessary businesses, which have very good upside potential.
IPO’s – I do see 2021 being the next year when ‘active equity’ groups start to unload chunks of their portfolios through floating company after company to bring in the basic currency of their own businesses – capital.
So, more IPO’s can be seen as the most fluent way of dumping part if not all of their capital investments as they bring those companies to the market.
But private investors are best to count themselves out of such participation. Just like the farrago of the global bankers ‘spoofing’ up the price/value of Aston Martin on the market a few years back. The company showed massive debts on coming to the market at £19 a share, they have since been shown to have fallen to a low of just 1.4p earlier this year before being ‘saved’ yet again.
Major global bankers like Goldman Sachs were shown to be total sharks in attempting to drive the price up to £22.50 before the £19 price was defined.
And what price the ‘due diligence’ of its brokers, accountants and bankers?
Private investors are best left out of ‘degearing active equity companies’ driving IPO’s of their interests.
Leave it to the professionals who gamble daily with investor and pension monies.
SPAC’s – I am just underway with writing an article on the fashion and the use of SPACS – special purpose acquisition companies – which are now the frequent channel for many of the IPO’s that I have just described.
Again leave them to the professionals – it is they, the original equity investors who will make big profits as the SPACs get underway.
Although broker spoofing could well drive up the IPO price giving private investors a quick opportunity, they just have to be ‘fleet of foot’.
