I top-sliced Pace [PIC.L] today, on the basis I’m up 100% on it and now’s not the time to be greedy.
Pace could hit £2, perhaps even get bought, but I’m lightening up as the market is, as a whole, super-risky right now.
Lamprel [LAM.L] collapsed again yesterday. Its story is almost too bad to be true. Yet it underlines the fact these are not ordinary times in the market.
Normally I search out “special situations” on the expectation one in four will go belly up and the others will provide me with fat profits.
The one in 4 is a pessimistic projection – one that until recently didn’t occur; now it seems that this ratio is not unrealistic.
This market seems different. I am, therefore, moderating my method.
Pre 2011 I would have bought DRAX [DRX.L] when iy slumped, in a heart beat, not now. I would be in Borders and Southern [BOR.L] at this level; today, no way!
This is a market where a stock gets very cheap and then gets cheaper still and then falls more, and may well be spirited away by insiders.
Therefore, it’s a waiting game because there is no transparency and there are sharks at every turn.
In my opinion times are so hard the dishonest are being driven to crime meaning you can’t be too paranoid. In the old days the dishonest could stick to the rules and do very well but now the squeeze is on, they’re turning to stealing because pickings are slim.
It’s like junkies turning to burglary. Before the credit crunch, the money junkies could get all the money supply they wanted just by lying and cheating, now the flood of cash has dried up they are having to steal.
It does mean that honest companies will get dragged down, too. The crisis is splitting the honest from the bent wherever profit is to be had.
Where there is chaos there is always opportunity, however unpalatable the realities.
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