Tuesday 18 September 2012

September Market Update

Most Western markets have experienced a sustained rally during the last few months, the most recent leg being mostly attributed to Ben Bernanke's further monetary easing measures at the US FED.

On the face of it everything is looking quite rosy. My personal portfolio is hitting all time highs, thanks in part by some great recent gains in my house builders' shares. Persimmon have now almost doubled since I bought, and others such as Barrat, Redrow, Taylor Wimpey and Telford Homes are up between 25%-50%.

Also my Lloyds bank shareholding is doing quite well at the moment up about 30% to 40p from my average purchase price of 31p

My tobacco stocks, Imperial Tobacco and British American Tobacco, have fallen from grace a little after a great run, following a decision from the Australian government to ban advertising on cigarette packets. However I still see this pair as a great long term holding as they are positioning themselves to reap rich rewards from emerging markets and have a great track record for delivering returns to shareholders.

BAE systems, the weapons and technology company, is up about 20% from my purchase price of 285p on news of a potential merger with EADS, if the merger goes ahead I will re-evaluate and may well liquidise this holding as EADS dividend yield is much lower than BAE and their PE ratio is substantially higher. More research definitely needed here.

My big Pharmaceutical plays are treading water, a small loss showing on my AstraZeneca shares being offset by a small gain in GlaxoSmithKline. Both companies however throw off a good dividend of circa 5% and are attractively priced and should benefit long term from our ageing population so i will continue to hold.

My other holdings, BT, Vodaphone, Aviva, BG Group, Polo Resources and Tesco are all showing nominal gains (except Tesco which is down about 15%) and are generating decent dividend returns so will continue to hold these as well.

I must add that although I don’t plan to sell any holdings soon (except perhaps BAE) I am not wholly confident about the market's short/mid term prospects. As stated in previous posts I don't agree with the way Western governments are tackling their huge debt problems and I think we could see large fluctuations in market prices as the debt scenario plays out. I still believe however that good quality company shares are the best bet for the long term and will view any subsequent crashes/recessions as further buying opportunities.

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