Takeover
I've had some cracking fun the last couple of weeks playing with A&L. I opened an account with them recently and talked through the possibility of a mortgage with them. The 'advisor' couldn't help but gloat how well their shares where doing at the moment, she actually tried to convince me this was a good reason to buy a house and take out a mortgage with them - go figure. Anyhow, I decided to have a look A&L, try and see what was making her so happy.
It turns out they are a prime candidate for takeover, people seem to think they could be bought for £13-£15 a share, they currently bounce between £11 and £12.50. Every time a whisper emanates suggesting they will be bought, the shares shoot up to £12.50, 5 days later when all is quiet they drop back to £11. A prime candidate for a spreadbet; get in a 11, ride to 12 and sell, of course if a bid does emerge you have upside to maybe £15. I’ve been fortunate to ride the bounce twice so far, hopefully 3 times lucky.
One for the diary...
The
Investors Chronicle are running a series of free to attend roadshows, session topics detailed as below:
- This year's hot stocks and market sectors
- The real benefits of the new pension rules
- Investment opportunities in other assests
and most interestingly...
- How to profit from financial spread-betting
Find out more and sign up at the
IC website, events are being held in London, Manchester and Edinburgh.
Fools Gold
This last month I've been speculating on Gold prices, and have made some very easy profits. Im struggling to find shares at good value, I reckon this is because we are near the end of the recent stockmarket bull, a rally over the course of the last two years that was arteficially stimulated with cheap money. I'm waiting for a big correction and expect the markets to collapse sooner rather than later, what am I, some sort of pessimist?
After the tech bubble burst and 11/9 interests rates dropped and it was easy to get your hands on cash\debt. The world went spending, China used the money to build business, America used the money to buy white goods from China (think Plasma TV's). America hands China $3bn a day, China has more USD than it knows what to do, America has more debt than it knows what to do. Now assuming the US has to pay this debt, what will it do? Work harder? Humm. I think the first thing it will do is devalue it's currency, this will reduce its debt. The snag for the rest of the world (most notably china) is that we have trillions of USD that will be worth less with the fall of the dollar. So anyone and everyone wants to get shut of their dollars - they are swapping them for gold!
I rode the gold bull from 540-600 (USD), I think its time for a correction and suspect it will slump to about 570 from its current level of 600. When it does, jump on for the ride, the only way is up. The best comment I have seen on the web that lucidly explains my thinking was found today, published in the
torygraph.
Vodafone to exit Japan?
This news broke on Friday afternoon, 'vodafone in talks to exit Japan', and much to my relief shares jumped 15 pence. They have the potential to rise much further, but I took the opportunity to exit Vodafone first thing Monday morning!
This is the kind of good news that had to come, however, I was distressed at how far below 120p the shares fell prior to this press release. I think with an outlook of generally tougher conditions for the telcos than in previous years, some big investors (the ones supporting the imagined 120 floor) may be now starting to look elsewhere.
I don’t think for one moment Sarin wanted to sell up shop in Japan, he has been forced to by shareholder pressure. It remains to be seen if he will throw in the towel and sell up in the states (thats the one shareholders really want) or if he walks (or is pushed) out of Vodafone, either way I think the share price is only like to rise in the short to medium term.
This is a classic example of the big problem with public companies. They are ran for the short term future of the share price and not the long term prospects of the company. Sarin doesn't want to sell up in Japan, because the Japanese market leads the rest of the world in mobile technology and by having a foot in the door over there, Vodafone get competitive advantage elsewhere around the globe. He doesn't want to sell up in the states because the Vodafone share of Verizion has increased $1o billion a year for the last to years (currently worth about $40 billion) it makes sense to hold out as long as possible. However, shareholders (and spread bet prospectors) want a quick buck, they say give me the money now, I know how best to use the capital you currently have tied up in this marginally successful enterprises...a very dubious company 'mission policy'.
If I hadn't lost control of this one I would have liked to have stayed in longer, but my exposure was too great. I'm out £400 better off and will look to get back in if they slip back to 115-120p with a smaller stake.
Why the blog?
A few people have asked me this...
..blogs are odd, I like to think of them as similar to red top newspapers, entertaining to read but full of crap. For this reason I didn't want to blog on something I have informed opionions about, I wouldn't be able to give a 100% to filling my blog with suitable nonesense.
So the chosen topic of blog nonesense is Financial Markets.
I noticed this morning the
New Scientist is blogging.
Its 50/50, one knife and one star...
Since my last post Google has, as expected, fallen further and is currently holding at about $365 per share. Unfortunately, I didn’t have the balls to short Google (and still don’t). I have a general aversion to shorting; I figure it’s in the interests of a large majority of people for the share price to rise, not fall, and on that basis alone a share price is generally more likely to rise than fall?
Yesterday I took the opportunity to escape from the body shop. I noticed the shares shot up about 8p and on impulse chose to take the profit (£60); it kept climbing, and was up 30p at one point. Yesterday afternoon, despite a quick Google, I struggled to find the reason behind the increase? I read the
paper this morning, and discovered there had been rumours of a management buyout, this had pushed the price up, but later in the day the rumours were scotched by the company and the shares slumped back to my exit point.
I’ve been wrestling with Vodafone ever since I first posted to the blog, I bought at 125p and was hoping for a quick return to 130p which would have made for a nice profit, however, it hasn’t really been going to plan. Soon after buying at 125p they slumped to 115p, at 115p I’ll confess to wearing several pairs of pants throughout the course the day. I started to doubt the floor I had suggested existed at 120p, was anything other than a figment of my imagination. I had frequent visions of a big investor exiting and the price plummeting to less than a pound.
Faith was restored when they very quickly bounced back to 120p giving me confidence, I bought again and when the shares climbed past 122.5p to 125p I was back in profit to the tune of (£100). Filled with confidence I bought again, big (£75 a point)! Big mistake when it slumped once again and as I write is back at 115p! I bought more when it returned to 120p, and currently have (£136 a point) at an average price of 122p. I am tempted to add to this (£50 at 115p) which would bring my average down to 120p but I think I have lost a little control on this one so am sitting back and waiting for a rise.
Dare to Short GOOG?
Ouch!! It’s been a catastrophic week for Google Inc, shares falling over 10% and wiping billions off the company. Again foresight is wonderful but only last week I considered shorting Google, it’s a massive company, but will crash as quickly as it’s grown.
Google makes bags of cash through selling advertising space online, a profitable business. However, it can only sell this space because it is used by a majority of internet users (38%) – but in no way whatsoever are any of these users tied to Google, they can go else where at the drop of a hat. If Google disappeared tomorrow the web would remain, people would still search the web, shop on the web and advertise online. By midday tomorrow you would have forgotten about Google, don’t believe me? Try it…
By the way, anybody remember
AltaVista?
