It has been a disappointing week, in which just about every share in The Punter’s portfolio has eased back.
It was a week in which overseas news was not good.
Italy’s third largest bank, Banca Monte dei Paschi di Siena, was forced to announce a major restructure, including an attempt to sell off its bad loans book.
The regular stress tests of banks highlighted the somewhat shaky position of two of Germany’s heavyweights Deutsche and Commerzbank.
In the UK, the Bank of England not only cut the official rate but announced plans to pump more than £160 billion (approximately $275 billion, or nearly $5 a head for every man, woman and child) into the British economy.
Here the Reserve Bank cut interest rates – something it never does when it thinks everything in the garden is rosy.
The big four Australian banks have all lifted the interest they pay for term deposits.
Thanks to the low rate of inflation, it means that bank deposits clearly offer a real rate of return to investors, with zero risk, given the government’s guarantee of deposits up to $250,000. That has to make investing in the riskier share market slightly less attractive.
So The Punter has reminded himself that no one ever went broke by taking profits, and has with some reluctance, sold half his Australian Agricultural Company holding (ASX code AAC).
He still thinks it is a good long term investment – the results announced in May were very good, and certainly seem to vindicate the company’s strategy of putting increasing focus on branded meat.
But The Punter is not a long term investor, and as previously stated, he feels that any general fall in the stock market will drag AAC shares down with it.
He bought 1000 shares in June for $1.34 and sold them at $2.04. Not too bad.
He has given Australian Dairy Farms (AHF) a hard stare, because the shares have dropped 10 per cent in a week. But this is still a young company, still finding its feet as an integrated dairying/processing operation, so he has decided to grin and bear it, for now.
He has 15,000 AHF shares. At the time of press the company’s share price was two cents.
His biggest profits are on his gold shares. But as long as the gold price edges higher, and the global financial system looks increasingly shaky, he is happy to keep them.
• The Punter had $50,000 starting capital in February, 2009. His total portfolio now stands at $76,248 and he has a cash balance of $30,293. The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
