Monthly Archives March 2012

Thinking About Investing in the Stock Market

Is it a good time to invest? The global economy is shaky, businesses are struggling and marketing budgets are tight.

How can businesses increase their value and their profit if they can’t afford to expand..?

When will be a good time to think about investing in the stock market?

Well, I don’t know a great deal about it but I read and digest information and I dabble with a virtual portfolio (an excellent way to get started without spending a penny).

In my opinion, the best time to get into investing in the Stock Market was 2008!

To justify claiming that the eruption of the financial crisis led to an ideal time to invest, when rock-steady businesses were popping all over the place, I call on my virtual portfolio from the past.

I have an account with Interactive Investor (www.iii.co.uk) which I opened back in 2008.

When the banks started to falter and companies started to lose value everyone seemed to rush to gold as a safe haven. This led to a surge in gold prices and an abundance of ‘Cash for Gold’ adverts on TV.

My thinking (as a total novice) was, if gold is going up in value, then any companies that can find more of it will reap the rewards and so I started to look at the performance of gold mining companies.

In any industry sector there will be winners and losers. Strong companies with good management and a little good fortune will do better than badly managed and strategically ill-placed ones so it always pays to do some digging.

I only did a small amount of research owing to time but I selected a number of gold mining companies and added them to my virtual portfolio.

Just a few weeks ago I reactivated my Interactive Investor account and had a nose at the old portfolio to see what had happened.

The overall profit on all of the virtual investments in companies across the gold mining sector was 722.95%

The best performing company rose by a staggering 8733%

The difference between the best performing and the overall portfolio indicates that some of the virtual shares should have been discarded and reinvested in some of the better performers but I still think growth of over 700% in 4 years isn’t bad!

Someone once told me there’s never a bad time to buy property.

I think this is true but it’s important to also remember that although there’s never a bad time to invest in property, there are some properties that will always be a bad investment.

The same applies to investing in companies. Some will do better than others but if you do your research you can avoid potential bad investments.

It’s easy to say all this when it comes to small scale investing but given the task of managing millions or billions of pounds or dollars, of other people’s money and being targeted, it becomes harder to find a safe place to put it all!

So anyway, I reopened my virtual account, had a look at a few companies and last week I bought a few shares in Carphone Warehouse. Their share value recently dropped when they shed ‘Best Buys’ and now they’re bouncing along a bit of a trough but all being well, the only way is up!