It is surprising how quickly things can go from boom to bust in just a matter of a few weeks. The last time I really sat down and looked through my portfolio was in early December last year and it looked to be going from strength to strength. The announcments by the U.S. and China to sure up the capital requirements of banks has really put the breaks on things. There is talk that the massive recovery in 2009 has left 2010 in a state of over inflation, and this year we will not see similar gains. There are real fears that government overspending will lead to a potential downgrading of our AAA credit rating. This will mean that the value of the stirling will drop and in turn will have massive impacts on the market. The catch is to reel in this public spending there needs to be cuts and this inevertably means job cuts. I was reading that 21% of the population are employed in the public sector. So a large proportion of people not working, borrowing and spending will potentially slow growth even further. Nothing has been revealed in the way of policy as yet but everyone is holding their breath in anticipation of how things are going to play out after the next election.
In regards to mining stocks much of the growth last year was due to the expansion of manufactuing in China. There is a real fear that China is stockpiling raw materials in order to create a market fall in the future. How true this rumour is I dont know but there has been a serious effort by China to put the breaks on expansion and borrowing. Some positive news however is the potential for countries to return to purchasing commodities as their stckpiles deplete after the recession. Companies like Xstrata and BHP are always likely to do well out of this.
Now of late there has been a marked reduction in the number of broker recomendations. What i do notice however is that the same companies week in and week out seem to get mentions. These have included
DairyCrest
Cable and Wireless
ARM Holdings
Cranswick
British Land
Halfords
In regards to mining stocks much of the growth last year was due to the expansion of manufactuing in China. There is a real fear that China is stockpiling raw materials in order to create a market fall in the future. How true this rumour is I dont know but there has been a serious effort by China to put the breaks on expansion and borrowing. Some positive news however is the potential for countries to return to purchasing commodities as their stckpiles deplete after the recession. Companies like Xstrata and BHP are always likely to do well out of this.
Now of late there has been a marked reduction in the number of broker recomendations. What i do notice however is that the same companies week in and week out seem to get mentions. These have included
DairyCrest
Cable and Wireless
ARM Holdings
Cranswick
British Land
Halfords
As always, the rule i follow when deciding where to put my money is look for sectors that are firstly necessary and people cannot do without. For example food, oil, drugs and to a certain extent technology. Secondly look for potential sectors that are going to be necessary such as renewable energy resources and new technologies. Avoid sectors that if push comes to shove people can do without such as cars, construction and aeronautics.
Brokers Recommendations
Company | Old Target (current price) | New Target | Broker (s) |
Planet Payment | 105p | 110p | Daniel Stuart |
Cranswick | 766p | 820p | Panmure Gordon |
Land Securities | 656p | 730p | Deutsche Bank |
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