Oil at 2 month low

March futures for  WTI (West Texas Intermediate) Crude Oil fell $1.68 to $86.19, the lowest since the end of November 2010.

Saudi Arabia’s oil minister, Ali al-Naimi, said that OPEC (Organistion of the Petroleum Exporting Countries) could raise output plus JP Morgan said in a broker note that additional supply was expected from the North Sea during 2011. The price was also pressurised by a stronger dollar - a strong dollar drives down commodity prices since they are sold in U.S. dollars.

The falling oil price probably didn't help matters in the U.K. oil shares together with the poor GDP figures. Though oil could continue to be week for the next few weeks on rising inventories, the outlook is for it to stay in the $85-95 range.

Nice turnaround on Sirius but Bowleven weak

Great to see the shorters and derampers stung on Sirius Minerals (SXX) with the price closing up on the day after the steep falls earlier in the day (up 3% at 17.75p). 17p seems a good support level for the next news flow.

Bowleven (BLVN) was less fortunate with it falling over 5% to 351p. Market maker tree shake no, but seems like someone was taking advantage of the bad GDP news. Makes me wonder if an RNS is due sooner than we think. Though uncomfortable I bought some more at 350p. Little overcooked on this one but the fundamentals are strong purely on the oil they've discovered already. Feels like Xcite Energy (XEL) before the flow test results, but still disconcerting with this size of investment. Will be interesting day tomorrow to see if finally we can have a blue day. A test of the investor on this stock today and I'm holding my nerve for now. Stupid, we'll see!!

Why Contrarian Investor UK bothers?

I was talking to one of my investment club contacts today and I hear there's been some posts on the iii.co.uk bulletin questioning the motives behind this blog. Ramping, plagarising etc. etc. - pretty distasteful stuff!

If I was writing purely to "ramp" my portfolio then there would be better and less time consuming ways to do it. For example, like other offenders, I could create multiple usernames on the bulletin boards and plug away. I like to think there is some reason arguments for my supposed "ramps". Plus I cover stocks and subjects that I do not even own e.g. recent posts on Irish banking collapse, Google, Apple etc. I do look at the content of bulletin boards for additional information but if I "copy" anything I will always reference the author.

I write the Contrarian Investor on an anonymous basis purely to protect my interests in my job. It is not because I wish to hide behind posts which are ill considered, non-sensical and full of errors. I make a couple of pounds a day from Google Adsense and nothing more. None of the stocks I talk about dramatically rise after I compose a post, so my supposed "ramps" don't work! Though I think Buffett is an amazing investor, I consider myself in the Z list compared with the greats. Always learning from mistakes, and there's always something to learn in this game no matter the number of years.

The reason I write Contrarian Investor UK is because:
1. I love the workings of the stock market and I am fascinated by its herd psychology
2. There are very few places to find information on small cap UK stocks apart from the bulletin boards and there's some good stuff there but a lot of dross too.
3. Unlike the U.S. there are few good U.K. stock blogs with informative content
4. I want to share my knowledge of the stocks I invest in and the significant research I do on them
5. Finally I enjoy writing and it helps me to confirm my investing decisions

I gave up Contrarian Investor UK last July because work was too busy and commuting too long. But I missed the buzz of writing a blog even though it is a constant drain on my free time. Often I think, should I bother. But the odd email of positive support gives me the will to battle on. If the guys on the bulletin boards think I am doing a bad job and they can do better then so be it, perhaps they should start their own blog. I have been very pleased with the traffic to the site this month, 23,000 page views visitors and counting so I guess someone's interested??

Rough day today on bad U.K. GDP news

Its been a big red day across the board for the portfolio for the second day. The main reason was the unexpected news that the U.K.’s GDP (Gross Domestic Product) shrank in the final quarter of 2010 by 0.5%, compared with growth expectations of at least 0.2%. This was caused by weak services and construction, though manufacturing continued to be strong.

So we have a heady cocktail of rising inflation (4.8% RPI) and weakening growth which makes life very interesting for the Bank Of England (BOE). If they increase interest rates above 0.5% they risk curtailing growth even more especially with the raft of austerity measures and tax increases (e.g. VAT recently increased to 20%). BOE Governor, Mervyn King, said tonight that families faced the biggest squeeze on household income for 90 years. The government blamed the bad weather in December for the fall in economic output. The news probably puts the brakes on interest rate increases for the foreseeable future which should be good news for the U.K. stock market in 2011, unless a double dip recession does rear it's ugly head ahead. This will happen if quarter one GDP falls (a recession is technically two quarters of economic contraction).

On a stock specific note, Sirius Minerals (SXX) continued its downward trajectory, falling below 16p during the morning but it has now stabilised at 16.5p (down 3.5%). It is unclear for the reason for the big fall this morning.It may have been shorters or just an excess of sellers. I’m sure market makers also had a role to play to “panic the weak”.

Bowleven (BLVN) is suffering with a 5% fall to 352p. As for the reason for this big drop, no idea! Perhaps it’s a leak from Cameroon that the extended drilling has come to nothing, but nothing to confirm either way. Looking at level 2, certainly a big seller in the background and not enough buyers to mop up the excess supply. Not a market maker tree shake since not a dramatic fall, a gradual tick down as selling pressure built through the day.

Imagination Tech (IMG) has like Bowleven had a bad day, but has now recovered to 11p down 3.2% despite a story on Apple insider (http://www.appleinsider.com/articles/11/01/24/production_of_apples_ipad_2_to_begin_in_february_iphone_5_in_may_report.html) that production for IPAD 2 will start in February for an April launch
with Iphone 5 due in June both with the persistant rumour that these devices both will have IMG chips.

At least Xcite (XEL) has held nicely firm despite the overall market weakness, currently down 0.5p to 363-367p.