Sunday, 18 September 2011

Where I'm Investing Now

This is my first post about where I am actually discussing investments. I won't be giving specific stock picks as I don't want this to appear to be investment advise, however I will be stating where my money is going for the record and to track progress of my expectations. I should also note that I'm not a day trader and take a view over the medium / long term.

Over the last few months I have been increasing my exposure to the stock market and will be continuing to do this over the next few months at least. My aim being to select stocks that I believe are significantly undervalued with particular focus on stocks with good dividend yields. I'm attracted for two related reasons, firstly the low interest rate environment makes them an attractive income source and secondly for this very reason I expect that these stocks will be the first to recover and show the best growth over the next 2 to 3 years. Even the most bearish stock investors will struggle to resist the dividends of blue chip / high yielding stocks as interest rates continue to remain low. I do reassess my portfolio regularly but generally don't by a stock unless I think I'll be happy holding for at least 2 years. Also I am referring mainly to UK stocks simply because this is my native market and one I am more comfortable with; I do also have some exposure to European and US equities.

The looming shadows over the stock market that have caused the deep decline are well reported and at present the Eurozone crisis is the main factor. As touched on in a previous post I feel that the problem will soon be properly address simply because it has to be. Eurozone leaders have been guilty of just doing enough but have reacted when emergency looms and that is the situation now. The solution I expect to be a central European Treasury and formation of this institution will give the markets a confidence boost that the Eurozone crisis will be managed through. There will almost certainly follow a period of austerity in most of Europe but these factors have already been factored in to stock prices. Due to these continued austerity measures the market recovery will be slow but with a formal 'lender of last resort' in place in Europe there will be a feeling of stability and slow change in sentiment.

It is currently Sunday afternoon in London so all the stock markets are closed. The FTSE, DJIA, S&P and the DAX closed at 5368, 11509, 1216 and 5573 respectively on Friday.

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