○Use the old, use the new. Last year, one of my most valuable stocks fell 20 percent in one day, while my new holdings ended up rising 24 percent in one month. If 2025 continues as it started, things will get interesting.
Regular readers might have guessed that Novo Nordisk (NOVO), maker of weight-loss wonder drugs Ozempic and Wigoby, was the loser. Disappointing trial data for the new jab has dealt a blow to a market that had been priced for perfection, knocking Novo out of my top 10 by value and leaving fans of the pharmaceutical giant feeling sick.
In light trading just before Christmas, the company’s new appetite suppressant, Kagrisema, was reported to reduce body weight by just 22.7 percent. This was an astonishing $100 billion reduction in market weight, more than the 25% expected. Don’t worry about the medical details or the financials. Even this fat capitalist lost weight, but not in a good way.
Fortunately, even bad news can contain good lessons for investors. First, the highs and lows of this drug trip show how risky the stock market is for short-term speculators, and why the stock market can still deliver high returns to long-term investors. Second, although the paper profits are very good, you don’t actually earn a penny until you sell it.
For example, I initially deposited the equivalent of $36, taking into account the subsequent 2-for-1 stock split, into American Depositary Receipts (ADRs) in February 2021 in hopes of avoiding Scandinavian withholding tax. i paid. Then, as that didn’t work out, I left the ADR to invest 2% of my lifetime savings in Stockholm listed stocks for 254 Danish kroner in June 2021.
My reasoning, as explained here at the time, is that Novo is the world’s largest producer of insulin, a hormone used to control diabetes, a disease often associated with obesity. did. That was, and still is, my core interest in this charity-controlled business founded in 1923, but shares with negligible dividends have always looked expensive.
Then word got out that new weight loss drugs could alleviate various ailments, making the stock look more attractive and cheaper. So I believe that thousands of years of evolution have equipped humans with the ability to cope with occasional food shortages, but not permanent food abundance, and demand will continue to grow. We invested on the basis that it is likely to continue to increase.
More recently, for purely personal reasons, I sold a five-figure plot in Novo for DKK 926 for a profit in August last year, as I reported here at the time. They were the second most valuable stock among the Forever Fund’s 50-odd holdings, but the sale dropped it to fifth place.
And a pre-Christmas stock market nightmare reminded me of how manic-depressive Mr. Market was, easily swinging between excessive elation and melancholy. So, based on the fact that nothing has changed about Novo’s fundamental need for pharmaceuticals, I invested enough to make this my 7th most valuable holding again, and added more shares on Monday. I paid 623 Danish kroner to buy it.
That’s nearly a third less than what I sold for last August, and a reminder of the topic of price volatility and why it makes sense to consider taking profits while you can. We provide. The latter point is probably most important for other investors who have made significant profits after long bull markets (periods of rising prices).
Exceptions are more interesting and probably more profitable than the rules. As reported here, aircraft maker Boeing (BA) is my winter winner after the stock I bought for $139 in November rose to trade at $172 on Friday. It became.
This is an encouraging start, but in the longer term there are reasons to be scared as well as encouraging. I first invested 2% of my life savings in Boeing for $125 in November 2014 due to the growing demand for quick and convenient international travel.
Then, in 2018 and 2019, two horrific Boeing 737 Max crashes occurred in Indonesia and Ethiopia, killing 346 people. Despite originally intending to own these shares forever, he sold the lots in February and March 2019 for $410 and $397, as reported here at the time.
Last month I discussed how this company forms half of a global duopoly alongside Europe’s Airbus (AIR). Unfortunately, Boeing also suffered from mismanagement, industrial disputes, and shoddy workmanship. Despite this, demand remained strong and we did not think the situation could get any worse.
And last Sunday, a Boeing 737-800 crashed in South Korea, killing 179 people. The stock price fell 3% on further uncertainty, but it remains to be seen what the investigation will reveal.
However, I would like to point out that it has been 15 years since the ill-fated jet left Boeing’s factory, so it seems too late to blame the manufacturer. There are about 4,400 other Boeing 737-800s still in service, or 15 percent of the world’s passenger fleet, but they are not going to be bailed out.
What does this drama show? The importance of diversification to reduce risk, or simply put, the importance of not putting all your eggs in one basket. This is the only certainty for investors in a very uncertain world, as the path to 2025 is charted and it could be a very difficult one.
Why promoting green energy could be a windfall for us all
Hogmanay celebrations in Edinburgh and other cities have been canceled due to strong winds expected on New Year’s Eve, but the bad winds will only help. Believe it or not, a winter storm last month caused 11,000 wind turbines in the UK to temporarily spin up, reducing electricity bills to below zero, according to the National Energy System Operator (Neso). It seems that it has become.
Wholesale prices appear to have fallen to -£6.57 per megawatt hour as supply exceeds demand. No, it will not appear on your household utility bill.
Neso, which is responsible for keeping the lights on, reported that wind power generated a record 22.5 gigawatts last month. Records are likely to be broken next year when the first stage of the world’s largest wind farm is due to be completed at Dogger Bank in the North Sea.
Renewable energy coming down from the macroeconomic clouds could also provide investors with good income. Greencoat UK Wind (UKW) is a self-proclaimed £2.2bn investment trust whose dividends paid to shareholders represent 7.9% of the price. Even better, these distributions have grown by an average of 8.1% per year over the past five years, according to research firm Morningstar.
Please note that dividends may be reduced or canceled without notice. However, if current rates of growth are maintained, investors’ incomes could double within nine years.
Despite this, rising installation and maintenance costs are raising serious questions about how profitable wind power is and whether it can survive without government subsidies. But this small shareholder in UKW is keen to increase clean energy production and reduce dependence on foreign dictators on fossil fuels. Happy new year!
