One Year On - Double Dip Recession?

Posted by Dan on 11 Dec 2009 12:36:17

The experts tell us that, although there have been fears of one, a double-dip recession is unlikely to happen. I would tend to agree. It certainly looks like the housing market is picking up and the rate of job cuts seems to be falling. However, in terms of the financial market and the FTSE Alternative Investment Market (AIM), you could easily argue that we have in fact experienced a double-dip recession.

Since the first of September 2009 the financial stocks (namely RBS, BARC and LLOY) have been falling, and since mid-November to now (mid-December) they have been really hammered. Events in Dubai haven't helped; neither has the beating of RBS and LLOY by Europe. The tax-payer's stake in RBS has increased now to 84% of the bank and LLOY have been forced to take part in a record-breaking rights issue to avoid the tax-payer taking a majority stake in them. Europe have forced RBS and LLOY to also sell off a large number of their branches in order to open up competition (and raise capital!).

All of these things have contributed to really butchering their share price (sadly for me; wishing with that wonderful hindsight that I should have sold out in September to take a healthy profit). Their share prices are pretty much where they were at this time last year and I am hoping that RBS doesn't go as low as 10p again!!

Over in the AIM, the miners and oil-discovery companies have also been taking a hit since September and have been dribbling down slowly but surely up to now. Whether the down-turn in these markets will continue remains to be seen. I certainly hope not as my profits have taken a beating and are just about keeping their head above water.

There is mixed opinion as to whether this has been the bottom of the market. I certainly hope it is!

My last blog post in this blog was about my initial purchase of shares in RBS.... Since then I have a holding now in Barclays Bank, Lloyds Banking Group, RBS, Greatland Gold, Pan Pacific Aggregates, Max Petroleum, Vialogy and Taylor Wimpey!