It would have been nice to have made a couple of million pounds in the last couple of weeks would it not? But regrettably I haven’t. In fact it would have been nice just to have broken even in the last couple of weeks, but that’s a story for another day.
Judging from the comments flying around yesterday I fooled a few people with the April Fool posting, but not many and sadly I failed to catch out Fagin who was the main target.
Mind you to be fair to me it was never going to be easy to catch out a man who picks pockets for a living and who runs a teenage gang of scallywags was it?
It was a bit childish I know, but hey these things have to be done once in a while.
I’ll update the true story of the last month in the next few days and trust me it’s not for those with a nervous disposition.
The last year has been a nightmare for me, not only have I been loosing my own actual money but I’ve been well behind Fagin in the Great British Trade Off right from the start. As Ron Dennis the one time head of the McLaren F1 team once said, ‘ first is first, second is nowhere’
As you know I swapped from investing in individual shares to investing in funds a few months ago. To begin with it was going quite nicely, but then I got hurt in the market decline in February. Got whip-sawed into buying in again a few days later and then a couple of weeks ago the decline started again.
I really had a sense of humour failure and decided to change direction yet again.
I know, I know, I know…………………………but hey my money is on the line.
The red mist came down and so I sold all my funds, after that my total loss was £6.5k, as a result my capital was down to £93.5k. I moved that from my brokers and put it with two spread betting companies.
I was so far behind Fagin that there was no point in messing around if I was going to beat him was there?
I needed a big liquid market that was volatile, The Dow Jones Index (DJI) fitted the bill. No mucking around in the children’s playground, go for it at £1000 a point. Entered short on the 16th of March at 24682 closed out on the 23rd at 23533. Immediately went long also at 23533 and closed out on the 26th at 23857. Waited till the following day as the market rose again and entered inter day short at 24400 closing out before the end of the day at 23800. Result.
I’m a bit worried that this is breaking the rules of The Great British Trade Off, so I’ve now invested my two million pounds profit back into funds to show good faith, but am using the odd £73k of the profit to charter a private jet and have a weekend in New York.
Should be a good Easter, hope yours is as well.
Yours aye
Humbug
‘A man must take the fat with the lean; that’s what he must make up his mind to, in this life‘- Charles Dickens
After a wonderful Santa Rally and an all-time portfolio high, I mismanaged the resulting sell-off and instead of taking my planned FTSE short in ETF UK3S in mid Jan, I took two long mining positions (KAZ and HGM) just before getting on a plane!
I arrived back in the UK 15 hours later to find that both my ‘gambles’ had failed and I should’ve stuck to the original short position plan after all. I took my two biggest losers of the competition so far!
Don’t take impulsive trades and stick to the plan.
Don’t trade when you’re supposed to be on holiday!
Don’t be greedy, I had a good Santa run already and was at an all time high when I committed my act of sabotage!
Prior to taking the two losing trades, around Jan 16th, I had squeezed out two profitable trades for around £1000 profit each – but my target for them was nearer £2500. Because I didn’t get what I thought I deserved I became subtly and insidiously petulant – this path led me to take the two impulsive trades.
On the back of a good run lasting many months I had become ‘omnipotent’; the thing is, I hadn’t really noticed my smugness sneak up on me, but had now led to a fear of pulling the trigger!
Dr Alex Elder recommends going flat at these times and so that is what I did in February; I have entered back gingerly in March and I have made a little money with GLEN and STOB and lost money with PMO.
I am mostly flat again today until I get clear market direction; it’s also time to put the highs and lows of emotion aside.
Time for a dinner with Humbug methinks; it’s important to share your mistakes with another trader to help to not repeat them!
The net result of this experience is, the Fagin trading account position now stands at £131,848.70 – nearly £10k down since
Christmas.
Yours Fagin!
In spite of that, all is good round here, I would have preferred the market correction to have been slightly less fierce to be honest as it caused me a bit of grief, but the trick as investors and traders is to work with what we’ve got at any given time.
Although I’m now only investing in funds to both spread risk and sub-contract the research that is needed with individual share purchases, I’m doing so in an aggressive style to build wealth, hopefully reasonably quickly. The plan is to chase momentum by following the smart money to anywhere in the world, looking for the strongest rising trends at any given time. Using big picture thinking allied to charts to determine which actual funds to buy and when to time the entry and exits.
Over time I’m hoping to beat the market by sensible use of this aggression, but I’m also very aware of the dangers and seek to mitigate them by going into cash whenever my charts tell me to do so.
Capital protection is paramount in this game, lose your capital and you’re no longer a player; in a nutshell, I need to be aggressive enough to make good money but not so aggressive that I lose it all.
By their very nature markets constantly overshoot either to the upside or the downside, it’s just the nature of the beast and indeed it’s this volatility that gives us our profit opportunities.
As I wrote last time we needed a correction because the market was bouncing off the walls with all together too much sugar in the system and lo and behold we got our correction. When I wrote last month I had no idea when it might happen and exactly what form it would take, but on balance I’m pleased that it has happened.
Although I’ve had a small investment in funds right from the start of The Great British Trade Off, I really only started loading up last year in October, November and December.
In investing, as in most areas of life, timing is close to everything and with hindsight my timing wasn’t brilliant, in that many of my positions whilst profitable hadn’t had enough time to generate significant gains, therefore I was always vulnerable to a sudden steep correction and so it proved.
But on balance it’s worked out fine, for sure I’ve lost a chunk of my recent profits in the first couple of weeks of the month, but nothing to keep me awake at night.
The way I do things is use various moving averages to tell me when to enter or exit, stay invested or go into and or stay in cash (cash being my safety position) and the system worked well, in that it cut in to protect me from what had the potential to be very nasty losses when markets were in free-fall and is now signalling new buying opportunities.
To state the blindingly obvious, none of us knows how high a market top or how low a market bottom will be until after the event – the ‘Monday Morning Quarterback’. The way markets were behaving all over the world a couple of weeks ago really did have the potential to damage wealth.
As a result this month I’ve been forced into doing all too many trades because of the intense volatility, I’m hoping that things now calm down again. Here in detail is what happened:
This was my largest area of investment; four of the five funds I was holding fell through my exit level, three to a loss, and one to a small profit.
I had £4k invested in the AXA Framlingham Robotech Fund these were sold at 11987p for a loss of £256.54; £4k in the AXA Framlingham Global Technology Fund sold for 291.7p, a loss of £170.92; £6k in the Neptune Global Technology Fund sold for 163.7p a loss of £179.44 and £5k in the Pictet Robotics Fund sold for 12042p a profit of £109.78.
Markets can turn on ‘sixpence’ and this recent correction was a good example. One week it was doom and gloom, the next singing and dancing.
My system whip-sawed me first by signalling the urgent need to sell these four funds which I did, then within a week posting a strong buying signal for two of them.
I’ve re-bought £5k of the AXA Framlingham Global Technology Fund at 305.8p and £5k of the Neptune Global Technology Fund at 172.6p.
Gratifyingly both of these re-purchases are already back in profit by some £190, which really does go to show, first work out your system and then simply work your system.
Fagin has been banging this into me for months, he’s so right; I can’t pretend I was in the mood to re-buy either of them but I’m glad I did. I also topped up my holding in the Polar Capital Global Technology Fund by £5k at 1777p, this is now my joint largest individual holding at £10k.
Was my second biggest investment at £18k, the decline was an average of 15% over the four funds I held.
I had £5k in the Baillie Gifford Greater China Fund sold at 465.8p for a loss of £420.36; £2k in the Fidelity China Consumer Fund sold at 207.7p for a loss of £90.29; £5k in the Gam Star China Equity Fund sold at 1972.62p for a loss of £229.41 and £6k in the Old Mutual China Equity Fund sold at 1509.28p for a loss of £11.84.
Once again I was whip-sawed and have re-bought £5k of the Baillie Gifford Greater China Fund at 498.4p and will look to buy the others if as and when.
I had £4k in the JPM Emerging Markets Fund sold at 308.7p for a loss of £132.18; £1k in the Man GLG Undervalued Assets Fund sold at 157.1p for a loss of £8.21 and £1k in the Man GLG Income Fund sold at 240.9p for a loss of £18.31.
In the last week the Neptune Emerging Markets Fund which had stayed out of trouble made another entry signal, I bought £5k at 1727p taking my holding to £8k and I was whip-sawed back into the JPM Emerging Markets Fund buying £5k at 3211p.
I also bought a top-up of £5k in the Neptune Global Alpha Fund at 564p taking my holding to £7k.
I was sorry to sell this one as I’m a huge fan of Terry Smith and I’ve no doubt I’ll be buying back into it in the future; but a couple of weeks ago it had fallen down past my exit point, I had no way of knowing how low it might go, so as my system gives me no discretion in whether to sell or not, I had no option (as a side issue I do have discretion over whether to buy after an entry signal but not after an exit one) I had £3k in the fund and sold at 350.84p for a loss of £77.89.
I had £1k in the Janus Henderson UK Smaller Companies Fund sold at 892.2p for a loss of £25.63.
My other two UK small cap funds the Marlborough UK Micro Cap Growth Fund and the Jupiter UK Smaller Companies Fund both kept out of trouble this month and I still hold, albeit only a tiny £1k in each.
Unless they generate an exit signal I’ll keep them, but I am wary of the UK right now. On the one hand we have some utterly brilliant small companies with huge potential for growth, that were it not for the political uncertainty I’d like to have a lot more of my money riding on and on the other hand we have no clear vision of where the economy and the country are going because we’re being led by a political class who are at best are operating outside their capabilities (some do a good impersonation of being sub-moronic, thinking about it, maybe it’s not an impersonation) aided and abetted by senior civil servants who clearly have no idea how the world works and are scared of their own shadows.
The inept Brexit negotiations are perhaps the best example of the damage that happens when the lunatics run the asylum.
I do wonder if the talent in and the underlying strength of the UK small cap sector is enough to bulldoze its way through the economic obstacles the politicians are needlessly creating, but on balance right now I think there are safer places for me to invest in. However as always I’ll be guided by my charts.
This sector has been good to me, my Legg Mason Japanese Equity Fund is up 10% in just the couple of months since I first bought in and last week made another strong entry signal. I bought £5k at 3666p taking my total holding to £10k. I also bought £5k of the Baillie Gifford Japanese Smaller Companies Fund at 4763p, this holding is up 1% in a week.
Whether you like Trump or not, his policies have made a big difference to the US markets.
The Trump bump is very real and I’ve been looking for a chance to buy in for a while. I’ve bought £5k of the Baillie Gifford American Fund at 651.4p; the fund is up 28% year to date.
Brazil and India are growing their economies strongly and I’ve wanted to invest, but both are very volatile. When you look at a chart for either, the prices are all over the place. The Goldman Sachs BRIC’s Equity Portfolio Fund is up strongly for the ytd with a reasonably smooth line, I’m hoping the spread of the fund over Russia and China as well will enable me to benefit from the growth in both Brazil and India without too many gut wrenching moments; I bought £5k at 1714p.
I’ve held the Sarisin Food and Agriculture Opportunities Fund since just before Christmas, my £2k investment is up nearly 4% since then, so I topped up another £5k at 1935p.
There we have it for this month, much too much activity, but I had no option but to do what my system told me at what was a volatile and potentially dangerous time.
Computer ‘say no’ I sell, computer ‘say yes’ I buy; let’s hope everything calms down now, calm is good.
One swallow doesn’t make a summer and two half decent months on the trot don’t make a successful investment strategy, but at long last things are beginning to go in the right direction. Furthermore, managing the whole thing is now only taking about half an hour a week. The plan, make my money work for me, rather than me work for my money.
Since I reported a month ago, I’ve made eleven purchases and two sales and am now just over 60% loaded.
I sold both of the ‘high yield’ funds – Invesco Perpetual High Yield for a profit of just £34 and the Axa Pan European High Yield Bond Fund for a profit of £58. My thinking was simple, whilst both funds were plodding slowly upwards, neither was shooting the lights out and surely I could put the capital employed to better use. Particularly as I found when I did some back testing, that neither fund was a good hedge against my other holding when there was a market correction.
Of the eleven purchases only one was a new fund for me. I took an opening £2k position in the Fidelity China Consumer Fund at £2.835. There’s been a rich middle class in China for some time, but now wealth is clearly trickling down to the worker bee’s as well, so buying a fund aiming to profit from the growing prosperity within the country is certainly logical, let’s just hope it’s profitable.
The other ten trades I took were top ups to existing holdings.
£3k in Baillie Gifford Greater China at £5.057, £2k in Gam Star China Equity at £20.4186 and £2k in the Old Mutual China Equity at £15.3546.
£2k in JPMorgan Emerging Markets at £3.191 and £2k in Neptune Emerging Markets at £1.67
£3k in AXA Framlingham Robotech at £130.0277, £3k in AXA Framlingham Global Technology at £3.054, £3k in Neptune Global Technology at £1.70, £2k in Polar Capital Global Technology at £16.54 and £2k in Pictet Robotics at £119.65.
This first round of the Great British Trade Off ends in a couple of months and Fagin is so far ahead he’s wiped me out, all credit to him.
My plan for February and March is to forget this year’s competition as I’ve lost by a huge margin, but to get the portfolio positioned so that I get away to a good start for the next round starting in the new financial year. To that end I’m very interested in becoming invested in India, Brazil, and the US and also increasing my exposure to the small cap end of the UK market.
My problem is that markets generally are suffering from a sugar rush and need to calm down; my ideal scenario would be a bit of a correction that I would look to buy into as it began to swing back up again.