INVESTMENT: THE PRIVATE INVESTOR: `It May Be a Suckers' Rally but I'm Happy'
Sean O'grady, The Independent (London, England)
THE REBOUND continues. It may just be a suckers' rally, of course, but at least it has brought some relief from the unremitting pain we've endured since the spring. I've been celebrating the fact that Vodafone is back over a quid and the shares I bought at the sub- 90p level a couple of weeks ago are in the money. That makes up, a bit, for the paper losses on the shares I bought when the shares fell below pounds 4, pounds 3, and pounds 2.
Some other components of the portfolio have also shown some welcome signs of life. Rolls-Royce, announced its results for the first half of this year. They reassured the markets and I think they reassured me. Rolls shares enjoyed their best day in ages, up more than 10 per cent and cresting the 150p mark. So I'm in the money on those I bought at the post-11 September nadir when they fell to 125p. Not that impressive, given that they floated in 1987 at 170p and I'd bought a previous tranche at pounds 2 or so, but, as with Vodafone, a rise that is very welcome nonetheless. The dividend was the same as last year.
It is easy to forget what a fine company Rolls-Royce is. Easy in both the sense that its qualities are often overlooked and in the sense that the bad news flow never seems to stop. The latest revelation was that the company's pension fund had a "black hole" of terrifying proportions, pounds 1bn, said Merrill Lynch last week. Rolls says the deficit is pounds 700m, about a third of its market value. According to the new SSAP 24 which has been frightening everyone, that means Rolls must take an additional hit of pounds 35m on the profit-and-loss account for 2003, a figure the City seemed to take in its stride. The worst may be over on that front.
Rolls investors also have to cope with the realisation that first- half profits fell by 81 per cent in the wake of the 11 September attacks. There are still risks, not least of another al-Qa'ida suicide mission, the effects of which on the markets and our prosperity are …
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Publication information: Article title: INVESTMENT: THE PRIVATE INVESTOR: `It May Be a Suckers' Rally but I'm Happy'. Contributors: Sean O'grady - Author. Newspaper title: The Independent (London, England). Publication date: August 24, 2002. Page number: 5. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.
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