Breaches of the Peace and Stockmarket Trends

The demonstrations in London and other cities against Israel are clearly “breaches of the peace” and should have been prevented. They were not simply peaceful demonstrations calling for a ceasefire in Gaza. The police are being way too feeble in enforcing the law and should call in the army if they feel that they do not have sufficient resources to enforce calm.

A ceasefire by Israel is not going to happen unless Hamas releases the hostages they hold and stop firing rockets into Israel – that also requires Iran to stop funding the attacks on Israel by Hamas and Hezbollah.

The demonstrators against Israel are being completely unrealistic in their demands. Palestinians may have some grounds for complaints about their treatment in Gaza but they are not helping to resolve their problems by the recent terrorist attacks on ordinary civilians.

Stockmarket Trends

Have we reached the late stage of bear market capitulation as Paul Scott suggested last week? I certainly get that feeling so far as small cap stocks go. Good news has little impact while bad news causes abrupt share price falls.

Last week the main good news was that I had sold shares in Fireangel (FA.) and Strix (KETL) some time ago thus avoiding big losses, For example Fireangel has received a bid at 7.4p when I sold for a small loss in 2016 (originally bought at less than 300p in 2014). Reason for sale? Total lack of confidence in the management. Strix I held onto for too long resulting in a 36% loss. The company went into “diworsification” with some unwise purchases and the CFO has quit. Moral: it’s never too late to sell.

Safestyle (SFE) has been suspended and is “game over” with a likely nil return which I held briefly in 2016. Incompetent management seemed to be the problem.

CAB Payments (CABP), a payments business that only recently listed lost three quarters of its value after a profit warning last week. Moral: don’t buy new listings – wait until the business model is proven. I did not hold it. Similar problems at Argentex (AGFX) after the CEO left abruptly.

Difficult to justify buying small cap stocks even at current prices when big oil and mining companies are paying such high dividends and interest on cash deposits can be as high as 5%.

Rishi Sunak may have stabilised the UK economy after the Truss debacle but fears of a prospective Labour Government are undermining confidence in the stock market, particularly by foreign investors. With UK taxes too high there are clearly many people sitting on their hands waiting to see which way the economy trends.   

Roger Lawson (Twitter  )

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News from Israel and Paul Scott Podcasts

I missed most of the Northern VCT (NVT) webinar today as I was watching the BBC TV news at 1.00 pm and they did not send out a reminder. It was mostly bad news from Israel of course although trouble in the Middle East has resulted in a rise in the price of oil which has had a positive impact on my oil/gas company holdings. But the rest of my portfolio has fallen today at the time of writing which has been a consistent story of late.

I cannot understand the tactics of Hamas. The chance of them achieving a military victory over Israel I would view as negligible and politically by killing civilians they just encourage the hardliners in Israel to stick to their views. Retaliation from Israel will follow. Hamas will also destroy any support they have from the rest of the world. It’s certainly not a recipe for peace but for more war. What do they hope to achieve? It’s simply stupidity.

Monday is usually a positive day for stocks but not lately. Paul Scott suggests that one reason for recent falls in equities is fund managers of open-end funds having to sell to meet realisations by investors. Folks are ditching equities and piling into cash and fixed income bonds and he is probably right. This can only be a short-term solution though. I am keeping my powder dry until I see good market opportunities. Companies that generate real profits and cash are what I prefer to hold.

I did listen to the latest Paul Scott podcast this morning (readily available on the internet) and he had the usual wise words about markets and events. He writes for Stockopedia. His favourite phrase now seems to be “I dunno” even though he mostly gets his comments on companies right. Humility is always a good thing when commenting on markets.

There is a Mello webinar this evening starting at 5.00 pm. With its focus on small cap stocks this is a useful event to get the feel of the market and learn about smaller UK listed companies.

Roger Lawson (Twitter  )

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