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Stock Market-Was There Any Need To Panic?


By William Mills

Monday’s stock market fall was a buying opportunity for the brave to snap up plenty of bargains.

Oil giant Shell dipped briefly into the 1500’s giving a yield of over 7%.

The miners have been battered. But they will turn around in due course. The planet’s population is still growing and we all need clothes to wear and houses to live in.

Although Black Rock World Mining has taken a battering in recent months it is maintaining its dividend and has sufficient retained earnings to enable it to do so for the foreseeable future.

At 214 p a share and a yield of over 9% it looks attractive, and so long as it’s largest holdings of BHP Billiton and Rio Tinto continue to pay their dividends it should prosper.

The idea that China’s economy might be slowing down should not weigh too heavily on western investors’ sentiments. They have, after all declared they want to build their home economy and reduce their reliance on overseas’ trade.

If the Chinese don’t manufacture the world’s goods it is all the more work for the rest of us.

The fall in oil prices means less money for the OPEC countries to spend, and instead more for us on our own shopping here at home.

Cheap energy was what the western economies were built on, so lower the price the better. However world demand is still there and it may turn out that fracking has just produced a temporary glut before demand once again gets in the driving seat.

One commentator argued that demand will push prices back to $70 a barrel by Christmas. Whether this price is achieved or not, it is still a lot lower than the $100 plus we were living with last year.

The oil majors will recover. They are traders buying and selling other people’s oil and taking a cut for refining and transporting it.

Petrochemicals also make up a huge part of their business and provide useful cashflow so necessary to keep the dividends coming.

The real losers will be the OPEC governments who use oil revenues to buy their population’s obedience. Maybe they will have to try democracy in the future?

Closer to home the UK government will have less tax revenue from North Sea oil so will have to tighten its belt perhaps by reducing its own glut of civil servants.

NB. The stock tips are the author’s own ideas and he has held some of the shares mentioned at some time. Shares can go up as well as down and it is wise to seek professional advice in before trading on the money markets.

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