|The FTSE fell as low as 3512 points in March 2009 and in the same month the AIM fell to 373 points. The recession that followed has been one of the most aggressive on record and unemployment is currently at 7.9%. These stats scream doom and gloom and a quick Google search does nothing to counter them.
2009 is being touted as the ‘worst year ever’ by everyone from graduates to bankers to IT professionals to recruitment consultants. Of those questioned in a recent survey by YouGov, one in 20 respondents described 2009 as their worst year ever and almost half said that they were most worried about money or debt.
Despite the bleak start to 2009 and the gravity of the above figures, the markets have shown huge gains and unprecedented recovery since their March lows - the FTSE soared to its 2009 high of 5382 points in November and AIM hit its high of 679 points on the 19th October. The contra investors who saw the bargains in March, both in the FTSE and AIM, should have made a tidy profit assuming their investments were based on the company having strong fundamentals and being extremely undervalued. There were instances when some bank shares were effectively ‘penny shares’!
2009 is almost at a close and ending in a much better state than anyone could have hoped for at the beginning of the year, but what does 2010 hold? The General Election is guaranteed to ring changes of a political nature but as for predicting the economy and markets, it’s anyone’s guess. The pessimists amongst us will be heralding a double dip recession where the optimists will be taking the positives from the low interest rates, stock market recovery and government spending.
Whatever happens, if you are an investor in penny shares on AIM or in blue chips on the FTSE and your investing mantras reflect those of Warren Buffett, your methods should remain unchanged. Some of his beliefs are:
- Invest in business not in stock
- Only buy businesses that you understand
- Hold for the long term
- Ignore short-term fluctuations in price
- Buy good businesses when prices are down
- Do not actively trade
- Do not over diversify
In the meantime enjoy the festive season of 2009 and wait for the events of 2010 to unfold.
About the Author:
Established in 1992, http://www.cityequities.com/en/ has almost two decades worth of experience in investment. By becoming a client of City Equities, you can invest in http://www.cityequities.com/en/ that have the potential for substantial growth.
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