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Andrew,
You say inflation is ‘projected’ to fall to 3% by the end of the year. I for one do not trust these so called experts. The ‘experts’ claimed through Covid that the spike inflation was ‘transitory’. Clearly it wasn’t. Had interest rates been ramped up sooner inflation wouldn’t be as high as it is.
The bottom line is I do not trust the BOE, the Fed and other central banks. They are rudderless and are bolting the stable door after the horse has bolted.
Why are central banks and governments not targeting the real issue of inflation, which is sheer profiteering from companies. The oilers being the main offenders. What’s the point in raising interest rates to dangerous levels while companies are profiteering and ramping up prices? Talk about running a bath with the plug out.
Badjob,
I’ve said for as long as I can remember that Barclays is one of the lowest rated banks because of the piddly dividend on offer. Given you can get 4.25% ( possibly more) in a cash ISA why would you chose to buy shares in Barclays instead for 5% dividends and the risk of the financials running into trouble. I’ve been watching Barclays for a while but until the dividend reaches at least 6.5% I’m not interested in investing and there I’ll be many like me.
Yes the NAV is about double the current share price but that’s not enough of a reason to invest as assets can end to being written down.
The Barclays board really need to start treating shareholders with a bit more consideration! I’m surprised an activist investor hasn’t taken a sizeable stake to force change as Barclays is a cash generating machine but the shareholder payouts just don’t cut the mustard.
Tom,
Although I treat ITV as a trading share I don’t put huge amounts into it therefore a few pence increase would hardly be worth it. 80p gives me a margin of safety and the chance of a decent profit. I think a lot of holders are here for the takeover rumours but I’m doubtful that’ll happen. It’s a good company but what I see are huge amounts of investment required to move with the times and I simply don’t think the share price is as cheap as people think. Not when you look at the chunky divi payers in the FTSE 100 at present.
The PE may be 7 but the FTSE is littered with companies trading on single digit PE ratio. Barclays 5, L&G 7.5 and many others. ITV for me is a trading share. I bought at 65 and sold at 80, way too soon as it touched 96p a few weeks ago. I’m looking to buy back in under 80p if it gets there, it might not. But compared to other companies that pay better dividends, the ITV share price isn’t that cheap.
Banburyboy,
No one can say with 100% certainty where a share price will be in a few months. Especially in this market these days where share price movements just aren’t fathomable.
It could be £18 in the summer but it could also be £12. A lot will hinge on the level of dividend being paid and the forward order book and outlook. If the dividend gets scrapped altogether I think the share price would come under serious pressure.
As for the housing market, I’d say interest rate are close to peaking. If house prices stay flat for a year it’ll be a 10% reduction in house prices in real terms adjusting for inflation. I’m not one of those thinking there will be a 20% crash in house prices, with wages going up on average 6% a year I think house prices will stay flat for most of this year.
I think it’s a reduction in house sales that could hurt Persimmon more than any slight dip in house prices. I have a decent sized holding here and should it reach the lows of October last year I’ll certainly be adding as I think the long term outlook for house builders is very promising. But predicting where any share price will be in a few months is a mugs game. If you hold for the long term then share price movements aren’t that important as long as you’re receiving dividends and the long term prospects are sound.
I’m usually a very long term investor but did trade these down at the £1.40 level a few months back and sold out at £1.60. I’ve always thought the dividend is extremely poor which is why I’ve never held them long term. The dividend is well under 5% at a time when you can get 4.25% in a 1 year cash ISA. Yes there’s a share buy back on the horizon that’ll no doubt put a floor under the share price at some point. It’s trading at a hefty discount to NAV but you have to wonder why there has been no takeover bid given there has been with Standard Chartered which trades on much higher multiples than Barclays. I’ll probably re enter here if it gets to the £1.40 mark again but I think they really need to be a bit more generous with the dividend. They certainly don’t hold back with the bonuses.
I nearly had a nibble and participated in the placing but unless the placing price is a good bit below todays closing share price (highly doubtful) the SP will probably move lower to the placing price anyway so I’d rather wait to see how it plays out tomorrow. It certainly will be interesting….
The very short notice and lack of information means I won’t be participating in this. We don’t even know what price the shares will be priced at and the level of discount (if any). I’ll wait to see how the SP moves in the open market and decide whether or not to add. No way am I offering up my capital with so many unknowns and the acquisition isn’t guaranteed to go ahead. Very frustrating.
Andy,
Slow and boring is how you build wealth in this game! For example, let’s assume the L&G share price stays the same. At the current SP it’s yielding about 7.5%. And L&G have pledged to increase the dividend 5% annually. So if you bought shares today and reinvested the dividends, first year would yield 7.5% on your original investment but as you reinvest the dividend your yield will grow every year and after 10 years you’ll be getting a yield about 15% assuming you reinvest the dividends every year. Bonds are only paying about 4% and with inflation running at 10% then I’d rather have my money here. I guess if you want excitement you could buy £20k of shares in a company like Nvidia at a PE of 90, it may rise 50% in a month or drop 50% in a month. It may be exciting but you could also lose a fortune. I appreciate everyone has different strategies but slow and gradual building of wealth will almost always win over highly valued, high risk US equities! The L&G share price is moving sideways just now because of the LDI controversy but L&G have already stated they only lost £10 million as a result of the mini budget and when that’s confirmed I fully expect this to start moving north.
Banburyboy,
I’m a holder of PSN and doubled down at 1200 as I’m looking 5-10 years down the line but I have to disagree with a lot of what you said.
Firstly you don’t know that interest rates have peaked. And secondly, 1.8 million household’s fixed rate mortgage deals come to an end this year and given we are only a few weeks into the year we still have a while to wait to see how that plays out. And Buy to Let landlords are exiting and selling up as their profit margins are being eroded. Where I live houses are taking 2 months to sell and a lot of properties are listed as ‘reduced’.
You only have to look at Persimmon’s decline in forward sales and increase in cancellation rates to see the effect higher interest rates are having on buyers’ budgets. PSN wouldn’t be offering incentives if the outlook wasn’t challenging.
All that said, long term I’m bullish on the housing market and I’ll add more on dips if it gets to the 1300 range again but the size of the rise today doesn’t make sense to me. The speculative mania during COVID seems to have returned in the US which has rubbed off in the UK to a certain extent. If the FTSE hits 8000 I’ll start thinking about a short. I don’t think we have seen the pain yet.
Why did I not throw the kitchen sink at these when they dropped to 202p?! I had my finger hovering over the buy button and talked myself out of it! I guess I should be happy with my average of 228p and if I did buy a load at the 200’s my portfolio would have been 50% LGEN. There are not many shares out there at the moment that are ‘sleep easy’ companies but LGEN is definitely one of them. Very well run company, cheap and growing with a generous dividend.
There are 2 BP Garages 2 miles apart where I live. One is consistently 10p a litre more expensive for diesel than the other! Another example of the profit margins being the highest they’ve ever been when there can be a 10p a litre discrepancy on a litre of fuel.
The oil companies control what they sell it at. OPEC control the price of a barrel of oil as evidenced by them restricting output to keep the prices elevated but the last time I checked I didn’t buy my fuel from OPEC I bought it at the forecourt through BP and Shell. And those companies’ profit margins are the biggest they’ve ever been. The BP Chief Executive is on record as saying the energy sector is a ‘cash machine’ and his company are benefitting from record profits due to the high cost of energy. When those oil companies’ profit margins are ever increasing its profiteering clear as day. That is basic economics.
SD, I’m well aware of how supply and demand works. But given everything we buy comes on the back of a lorry and is manufactured in factories using a lot of energy, you’d think the governments task would be to firstly get a handle on the oil and energy companies. It’s no coincidence they are announcing record profits which must be the single biggest driver regarding inflation. The oilers in particular are getting away with murder and Biden has already called them out on it. While interest rates need to rise, we’ve went from 0.1% to 2.25% in the space of ten months and in that same time frame inflation has grown from about 5% to 10.1%. I can’t see how drastically increasing interest rates but letting the oil and energy companies announce record profits makes any sense. Surely both the issues should be getting tackled head on. As Thronegames has also stated, how we can have the government pulling in one direction and the BOE in another in the battle against inflation is ludicrous
This isn’t specific to LGEN but why is the focus on ramping up interest rates to fight inflation when oil and energy companies are profiteering massively and that’s the main reason inflation continues to rise?
Raising interest rates doesn’t seem to be bringing down inflation and it seems to be a pointless exercise when oil and energy companies are ripping people and businesses off. You only have to look at how much a barrel of oil has dropped in price from the highs yet those reductions aren’t reflected at the pumps. Joe Biden warned the oilers a couple of weeks ago to bring down pump prices yet our government seem to be sitting back and doing nothing to tackle these companies!
Therefore continuing to raise interest rates, piling more pressure on people and businesses, while the cartel that is OPEC and the oilers are raking it in, seems a bit like running a bath with the plug out. The incompetence of the government and the Bank of England astounds me.
Hi Clued,
The problems we are seeing now is a result of many factors. One being the flawed political system in this country. In the last election the Tories were voted in based on their manifesto and in the middle of their term they’ve changed leader and now we have a complete change of direction that no one voted for. And how they are allowed to announce this mini budget without publishing the OBR report is beyond me. Truss and Kwarteng are STILL maintaining their plan is the right one despite the turmoil it’s causing. Then we had Kwarteng having his champagne party the evening of the mini budget with Hedge Fund managers and a day after that he comes out to say there will be further tax cuts while those Hedge Fund managers he was hob knobbing with the day before shorted the pound and made a fortune. A snap General Election must surely be on the cards. We have a government single handedly driving up inflation even further and the BOE fighting to reduce it. Ridiculous!
I think LGEN is going to get clobbered tomorrow at the open after Bailey’s comments as well as the IMF’s. Truss and Kwarteng absolutely must be stopped as they are literally destabilising the British currency and economy. Never in my 41 years have I seen such incompetence leading our country. Still look on the bright side folks, Kwasi is on a nice wee jaunt to Washington probably scoffing a Ribeye steak and drinking champagne that we’ll be paying for while the pound no doubt tanks again tomorrow. Arghhhh
I was lucky enough to buy 2000 shares in L&G a couple of months back at 236p and couldn’t believe my luck I got them at that price. Even today they are still good value but the market seems determined to keep them under 275p. Then you look at companies like Ashtead that are valued at twice the price of L&G (PE 19) with a miserly 1.4% dividend. Different companies different sectors and outlooks obviously but I’d take safe and boring L&G over most stocks, especially ones with PE’s above 15. Buy and hold for years for me with this and add on any dips and enjoy the dividend which goes along way in the battle against inflation.
Alas_Smith
Share prices are manipulated. Shorting for example is the most common type of share price manipulation. It may well be legal but in my humble opinion it shouldn’t be.
Brokers and Investment banks can also move share prices of multi billion pound conglomerates substantially just by putting out a note with a price target without having to provide any proof of their workings. As is the case with Rio Tinto today. Several billions wiped off the value of Rio simply because they have slashed their price target yet still rate the shares a buy! The big boys control the market plain and simple. They wouldn’t make the billions they do playing on a level playing field with private investors.
They can short a share massively and publish their position along with a negative statement and drive the price down 10% easily and the level these guys play at that means millions in profits. And similar strategies if they go long.
To say share prices aren’t manipulated are simply untrue. It doesn’t matter to me as I’m a buy and hold investor, minimum 5 years and reinvest dividends and the compounding can really make you serious money once you get past the 5 year stage of holding.