The Great British Trade Off

 

Thumping win for Fagin (trading) as The Great British Trade Off (trading vs investing, £100,000 of their own money) reaches the end of Year 1 – now aggressively investing in funds Humbug (investing) has it all to do and fears he may never overhaul his trading partner

 

The Great British Trade OffHumbug vs Fagin, trading vs investing – £100,000 of their own money, and only one winner.

Since 2014 ‘Humbug’ – on account of his demeanour, or the fact that he owns an exquisite sweet shop; you pays your money and takes your choice – was the author of Diary of a DIY Investor.

Trading predominantly AIM stocks, Humbug entertained a loyal following with the thrills and spills of his small cap trading.

Following the Brexit vote, Humbug found it increasingly difficult to apply his system, because markets had become illogical and difficult to read, so he moved to the main market.

Humbug and trading partner, ‘Fagin’ –  on account of his determination to pick the market’s pocket – developed a swing trading system, and hatched the idea of The Great British Trade Off to see whether a slow and steady, long term investment strategy, would trump Fagin’s wham, bang, ‘thank you kindly guv’ trading approach.

Fagin aims to pick the markets pocket by using the daily signals their system produces to trade a short term time frame of days and weeks.

Humbug uses the weekly signals to trade/invest for weeks, months and possibly the whole year.

Which will prove to be the better way of approaching the current market with all its uncertainties? Will it beFagin’s quickly banked trades or will it be Humbug’s longer moves?

In a more recent development, Humbug recognised that the tight timeframe of a twelve month competition was causing him to chase short term profits rather than build long term wealth, so they have agreed to run GBTO for five years.

In another twist, Humbug has decided that the analysis required to pick individual stocks was unduly onerous, so he is now trading funds, but in a style intended to achieve aggressive returns; the additional frisson of the competition is therefore stocks vs funds

The boys recently launched www.seekingfinancialindependence.com
to share more information and to create a like minded community as they plot their course to financial independence.

 

If you would like to see any of the archived content it is all available, and it has been shaping up nicely into quite a contest:

 

The Great British Trade Off Archive 2017 here

Diary of a DIY Investor 2016 here

Diary of a DIY Investor 2015 here 

Diary of a DIY Investor 2014 here

 

18th May 2018

 

Hello I’m Humbug and let me tell you competing with Fagin is like trying to stop a steamroller by standing in front of it.

 

After last weeks first ever victory for Humbug, Fagin smashes him this week, although for the third week running he had good numbers and his portfolio rose by just over 1% he still got wiped out.

Hello I’m Humbug and let me tell you competing with Fagin is like trying to stop a steamroller by standing in front of it.

I had what for an investor is a great week, but still no where near good enough to beat him. Oh well I made a £1k gain in seven days and my latest call on China has been dead right so far so there’s much to celebrate. I’ve come second yet again, but its not all bad.

Lets drill down into Fagin’s numbers:

His gross profit for the week is £3490. He sold out of the Games Workshop Group PLC (GAW) on Thursday the 17th at 2570 for a profit of £1288

H&F 190518 1

 

With the benefit of hindsight he sold at least a day early. Had he held until today’s close he would have made twice as much profit. Is he upset? Nah, he sets a stop and a target and if the price hits either he exits and moves on.

As always with his trades it was a technical play. He looked for a pivot point, found what he thought was one and placed his bet of 1000 shares.

Watkin Jones PLC (WJG) was a trade he entered on the 5th of April at 189 and also closed Thursday May the 17th at 203.

 

H&F 190518 2

 

The green arrow shows the entry, the red the exit. He always bets on exactly the same criteria, find a likely pivot point and set a sensible not too greedy target. The gross profit here was £1540.

His final monies this week come from a £662 dividend from a previous holding in the John Wood Group PLC (WG.)

 

H&F 190518 3

 

As a side issue the arrows show his most recent trade and again with hindsight there was a lot more profit in the upswing than he made. Does he regret coming out too soon? As Sinatra famously sang ‘regrets I’ve had a few, but then again too few to mention’

So a brilliant week for Fagin, well done him.

Lets now take the drill to the Humbug numbers and see what happened to me.

Like I said earlier I had a good week. My portfolio increased for the third week running being up £1024 this week. For sure what goes up can come down, but so far in this second year of the GREAT BRITISH TRADE OFF I’m no longer embarrassing myself week after week (even if I’m still losing) because  since the new round of the competition started on April the 5th  I’m up £4200.

The way Fagin and I operate has more similarities than are apparent at first glance. Firstly we are both Chart Followers  or Technical Analysts to use the posh name.  Although we’re trading different instruments, him shares me funds we’re looking for the same thing, namely pivot points. Him looking for very short term upward momentum after the pivot, me longer term upward trends. So we’re both seeking  upward momentum after a pivot and then betting our money when we think we’ve found it.

The three graphs of the three Chinese Funds I invested in last week the Gam Star China Equity Fund, the Fidelity China Consumer Fund and the Old Mutual China Equity Fund illustrate the point of what I’m doing quite well.

The price of all three came down below their six week moving average which is where I like to start hunting, pivoted round and started going back up first through  the six week average and then through the green two week moving average, which is my buying trigger.

 

H&F 190518 4

 

H&F 190518 5

 

The green arrows show my entry points in each case.

I’ve got no sales pending for the coming week and although as I said before I would like to be 100% invested I can’t see anything matching my criteria so have no purchases planned either.

I’ve obviously no idea how much longer this almost worldwide upswing is going to last, but I’m happy to ride on its coat tails for now.

To briefly recap. A good week for both of us, but even so a resounding win this week for Fagin.

 

 

 

 

 

The Great British Trade Off

 

The most important thing in life is to stop saying ‘I wish’ and start saying ‘I will’. Consider nothing impossible, then treat possibilities as probabilities. Charles Dickens.

 

I’ve made a reasonable start to the month making £3000+ trading BBA Aviation PLC (BBA), Wood Group PLC (WG.) and as reported in last weeks roundup Advanced Medical Solutions PLC (AMS).

I’m currently holding Bodycote PLC (BOY), Games Worshop Group PLC (GAW), Rolls Royce Group PLC (RR.) and Watkin Jones PLC (WJG) in my main GREAT BRITISH TRADE OFF portfolio and am running a longer term experiment with a number of tiny positions as well. I’ll document these in more detail another day.

I found my recent trade in Advanced Medical Solutions PLC (AMS) psychologically challenging.

 

H&F 1605

 

To my surprise, I’m still slightly smarting from the mistakes I made five months ago in January.

As a result I snatched at my profits in true Fagin style as AMS hit my target for a third time, even though I could see the momentum in the share was still very strong.

Last year I believe I’d have handled the trade differently, I’d have added a trailing stop in the face of such strength and held on for a bit longer.

I’m also a little downbeat as I sat and watched my usual staple rockets KAZ, EVR, PMO and HGM take off without me. Had I traded these babies instead of the slower stocks above I might well have tripled my profits in the last two weeks.

What happened is, I got fed up with being wiggled in and out of them in the last correction and took my eye off them………………………………………typically they shot off!

Still I mustn’t grumble, Humbug’s right when he says that here in THE GREAT BRITISH TRADE OFF I pick the markets pocket and don’t aim to take the whole suit. Regular fast profits are a great way to build the capital for FINANCIAL INDEPENDENCE. Lets not be greedy.

I hope this doesn’t sound like ‘sour grapes’, because I am grateful for the profits I’ve made so far this month.

I’m a bit of a purist like one of my hero’s, Arsene Wenger. I put pressure on myself to trade as well as I can and try to focus on the quality of the trade rather than the money.

I like to win, but I also like to win with style!

All of Fagin’s gang are lifelong Arsenal supporters. AFC have taught me to be careful with my capital. I’ve learnt not to spend £16 on a burger and chips at the ground, when I can get one for a fiver outside!

Well that’s it for this update. Congratulations to Arsene for everything he’s done for British Football and for all the entertainment over the last 22 years.

Also congratulations to Humbug for beating me for the first time ever last week. However he was lucky I didn’t liquidate my position in Watkin Jones PLC (WJG).

Yours, Fagin

 

12 May 2018

 

‘Winners focus on winning, losers focus on winners’ For the first time in the 57 weeks of the Great British Trade Off, Humbug beats Fagin by a healthy margin

 

Again this week we’re continuing the experiment of doing a joint report. I’m pleased to say that Fagin’s had a good week and I’m even more pleased to say Humbug’s had a better one.

For the first time in the fifty seven weeks that the GREAT BRITISH TRADE OFF has been running I’ve beaten him and by a decent margin. How good is that.

Mind you following on from the great Tweet I re-tweeted this morning from Assad Tannous, a guy with thirty eight thousand followers which said: ‘WINNERS FOCUS ON WINNING, LOSERS FOCUS ON WINNERS’ its about time that I stopped worrying about how well Fagin’s doing and just did my own thing.

But hey, I want to savour the moment, I’ll get all sensible tomorrow.

Lets look at what Fagin did this week. He opened a new position in Rolls Royce (RR.) on Wednesday, its a bit under water as I write, albeit the price action was good today. But as he won’t be booking the result until he closes the trade, the running loss doesn’t count, as it’s still open.

 

GBTO 1205 1

 

The only trade he closed this week was the sale of 10k shares in Advanced Medical Solutions Group (AMS)

 

GBTO 1205 2

 

As you see from the excellent Sharescope graph, the trade was entered on Friday April 27th at 313p  and closed yesterday, nine trading days later at 325.57p. Trust me, yesterday’s open at just 310p would have been a buttock clenching moment with thirty one thousand pounds on the line. But a cool head and level two price data prevailed and he banked £1157 net profit.

The profit was only 3.7%, but this is the thing with trading. That 3.7% in nine days equates to an annual 107% return on capital and this trade wasn’t leveraged, if it had been the ROI would have been much higher.

The Wheeliedealer uses the spreads to leverage some of his long holdings, if your interested click here to go to his site to see his thoughts on the subject.

I’m Humbug and I wrote earlier, about how well this week had gone. The value of my GREAT BRITISH TRADE OFF portfolio increased by £1829, roughly 1.9% and now stands at £96,695. Now for sure what goes up can come down, but so far so good.

As a momentum investor who’s always looking for trends to follow I have to get onto them fairly quickly or they get away from me. Its only a few weeks ago that the markets looked doom and gloom and I was cutting back my exposure. But because market conditions have changed, I’ve changed. After this week’s £15k purchases of the three China funds, the Fidelity China Consumer Fund, the Gam Star China Equity Fund and the Old Mutual China Equity Fund I’m now 90% invested.

It never ceases to amaze me how the markets flip from optimism to pessimism in really short time frames.

The question I’m asking myself is am I jumping in too quickly? I’ll know in a few months, maybe sooner.

My best performing fund this week is the Baillie Gifford American B Accumulation Fund. I wish I had £10k in it rather than the £5k I have. It’s up 5.39% on the week and 32% on the year. Just look at what’s happened to it since Trump came to power. Wow.

 

GBTO 1205 3

 

So there we have it, Fagin’s up a very respectable £1157 but Humbug wins for the first time ever with £1829. Roll on next week

 

 

7th May 2018

 

Humbug is quietly pleased after one of his best weeks in the competition

 

One new open trade. Games Workshop Group PLC (GAW) in at 2439.95. Too early to know how this one will perform, but the trading update released today certainly won’t hurt

 

hum 0705 1

 

Humbug is quietly pleased with this week, in fact its been one of his best weeks of the competition. His portfolio has increased in value by £967.

All twelve funds currently held are up from this time last week. The best performer is the Baillie Gifford Japanese Smaller Companies Fund, up 2.6%, which as you can see is looking strong, albeit coming up on resistance.

 

hum 0705 2

 

The recent re-purchase of the Sarasin Food and Agriculture Opportunities Fund that had Humbug a little jittery as it came up on serious resistance has broken out to an all time high at 197.6. Sooner or later its going to pull back a bit, so it could do with running up to 205 or better before this happens. But so far so good.

Three re-purchases planned for the coming week, with orders going in over the weekend for action on Tuesday.

The Gam Star China Equity Institutional Fund up 3.23% on the week has crossed up through the two week moving average that in turn is above the six week moving average thus making the buying signal Humbug looks for.

 

hum 0705 3

 

As have the Fidelity China Consumer Fund up 1.85%.

 

hum 0705 4

 

And the Old Mutual China Equity Fund up 1.82%.

 

hum 0705 5

 

The plan is to put £5k into each, Humbug will then be 89% loaded going forward.

 

 

 

 

3rd May 2018

Fagin’s in the swing as he pulls away from Humbug again

Well, swing trading that is. Two short term trades closed out yesterday for a combined gross profit of £2511.50.

The smaller profit of the two, £967.50  came from BBA Aviation PLC (BBA)

 

Fagin 0705 1

 

Starting with the big sell off that didn’t hold on the 12th of April (a Roo tail) it looked as though a pivot point was happening. Entered at 312 with a tight stop loss in place, had a wobble on the 24th/25th of April but held on for the fairly low target of 4%. Exiting at 325 on the 2nd of May.

The larger profit of £1544 was produced by the Wood Group (John) PLC (WG.)

 

Fagin 0705 2

 

Again a very similar pattern to BBA, the stock formed a bottom at 520 between the 3rd and the 13th of April, confirmed by the roo tail on the 13th.

In at 552, out at 590 for a 7% gross gain.

Fagin the trader continues to outperform Humbug the investor and is beginning to open up a clear lead in this years Great British Trade Off.

 

1 may 2018

As The Great British Trade Off moves into 2018/9 Humbug is only interested in beating Fagin

 

You know that dreadful feeling when your out somewhere and you put your hand in your pocket and your wallet’s not there. OH CLUCK.

I’ve just had one of those moments a few seconds ago when I logged into the excellent Sharescope to check my weekly and monthly figures and they were obviously hopelessly wrong.

In my minds eye I was expecting to be somewhere around break-even on the week and up a bit on the month. Er no, Sharescope was showing way down on both.

Its to do with when Sharescope updates fund prices and the data I was seeing isn’t fully up to date. Panic over, but let me tell you there was a panic.

For years I’ve had the FTSE 100 (UKX) as my benchmark, but I’ve decided on a change of plan. Going forward I’m not going to bother with measuring my performance against anything, other than Fagin for The Great British Trade Off.

All I’m interested in is am I making money, if so how much. If an index is doing better or worse than I am…………………………….so be it.

As a trader I wanted to know whats moving, why is it moving, where’s it likely to go, what announcements are scheduled etc etc etc.

As an investor in funds I’ve traded (hee hee, pardon the pun) the excitement of all that crap, for a life of calm.

So what are my numbers? For the week I’m flat to all intents and purposes, being £19 down.

The 2018/9 Great British Trade Off started on April the 5th., so this is a three week month. For those three weeks I’m up £475 from the £92,519 I started this leg of the competition with and now have £92,994.

On my calculations that’s a gain for ‘the month’ of .5%. This is a bit less than the .25% a week I was hoping for, but there’s no point in me setting myself targets because the markets will go where they go, will they not.

As flagged up last week I had a new buying order with the brokers for the Sarasin Food and Agriculture Opportunities Fund. £5k went through on Monday at 194p. I don’t want to tempt fate, but my short term timing was good, its up £62 on the week.

Other than that I didn’t do any other trades and I won’t be selling anything in the coming week. Tomorrow the plan is to do a sweep through all the different fund sectors to see if there’s anything I should either be buying or keeping an eye on. I’m currently 68% invested so I’ve got money to spend if something really catches my eye.

But the money’s not burning a hole in my pocket.

 

 

 

 

The Great British Trade Off

 

‘Ride on! Rough-shod if need be, smooth-shod if that will do, but ride on! Ride on over all obstacles, and win the race!’ ~ Charles Dickens David Copperfield

 

When we started this competition last year I had no idea there would be such a large winning margin between investor and trader.

To my mind being able to buy and hold in a strong bull market might very well have beaten my short term, swing trading, pick pocketing method.

Indeed if I simply bought and held a few stocks such as KAZ, EVR and GAW instead of dipping in and out of them, I would have had a much better performance than I did.

However, I did not know what was going to happen next at the ‘hard right edge’ of the screen, so the above is easy to note with hindsight, and would I have been able to sit through the drawdowns? I doubt it.

My secret target known only to dear Humbug was to double my account in one year, I didn’t achieve this.

As it stood at the end of the first year in the Great British Trade Off competition, my account increased by 34.2% and I am very grateful for it.

I found it harder to double my account than I thought. I underestimated the amount of distraction there would be; Family time, travelling, work etc.

I also, as I’ve written about many times, underestimated my own psychological behaviour.

The only times I lost more than twice my risk were through poor decisions of my own making and these have a knock-on effect. My financial bank account is taking time to recover (I haven’t quite yet recovered the portfolio highs of last year), it is also taking time to recover my emotional bank account.

However, as I said I am very grateful for what I achieved and for the most part I stuck to a method that gave me my edge. Over the period I had a 62.5% win rate.

To quote one of my favourite mentors David Paul, who in turn quotes the famous martial artist Bruce Lee; ‘I fear not the man who has practised 10,000 different kicks once but I fear the man who knows one kick and has practised it 10,000 times’.

 

I must say I have thoroughly enjoyed the Great British Trade Off competition this year and I have learnt a lot through discussions and duelling with Humbug.

Of course it is made all the more sweeter by winning but we all know as traders it’s never enough and I hope this year to improve my performance, my psychology and my skill again.

This year my target is to grow my account by 5-7% per month, I am going to have to ask my daughter, Fagin’s Gang member and GCSE maths daughter/compounding expert to tell me what it will mean at the end of the year (+ 79.6% / + 125.2% Ed). For me I will focus on the next trade, emotional serenity and risk/money management.

Month 1 2018 – so far I am 2.7% up with one more week to go!

 

Yours Fagin

 

 

The Great British Trade Off

 

A week’s a long time in the markets – Humbug’s back in buying mode and explains the ‘Rule of 72’

 

It’s been a good week for me, obviously there’s no point in my setting targets as such, because as an investor I’m at the mercy of the markets. However if on average I make just a +0.25% gain a week, I finish the year with around a 14% capital gain.

Using the rule of ’72’ (where if you divide your percentage gain into 72, you’ll find how many years before you double your capital) I’ll double up every 5 years.

This week my portfolio was up +0.65%, which whilst it lagged my benchmark the FTSE 100 (UKX) which was up +1.43% is still a result I’m happy with as I was only 65% invested and the cash element acts as a performance drag in a rising market. So, yeah good.

I was asking the question out loud last week, ‘was the way the market was performing, the calm before the storm?’

Hum, as always who knows. But I doubt that we’ve heard the last of Syria and I doubt we’ve heard the last of the sabre rattling between America and China over trade, although the news flow about both seems to have calmed down over the last few days.

I think the market rose this last week because of this quietening down along with some decent company numbers coming out of the US and it shows that although we’re now in old bull territory there’s still buying appetite and underlying upward pressure.

It’s very interesting how the charts often point us in the right direction is it not? Again this time last week I was saying that the Neptune Global Alpha Fund and the Neptune Emerging Markets Fund were right down on the wire at my stop loss point.

I was wondering should I sell and take the hit (although because they were right on the line the decision wasn’t clear cut) It would have meant taking a small loss on both, which is neither here nor there. A system is a system and all that. The possible advantage to me would have been reducing my exposure to the market at a time of tension; the possible disadvantage would have been selling out of them if they bounced back up.

What stopped me from selling was the MACD indicator which was showing rising strength for both of them. This appears to have been the right call; the Neptune Global Alpha Fund is up 2.56% on the week and the Neptune Emerging Markets Fund up 2.06%.

With hindsight I’m glad I was slow to pull the selling trigger.

For the coming week I’ve got nothing that needs to be sold, but I could do with the Japanese market going back up, as the profits on my two Japanese funds are bleeding away and they are getting close to the selling zone.

Mrs Thatcher once said ‘a week’s a long time in politics’ and to paraphrase her words, a week’s a long time in the markets. Last week I was thinking of selling stuff, this week I’m buying stuff.

This fund has crossed the line that is my buying signal and the MACD is just turning up. So in spite of my doubts about the state of the world, I’ll be placing a buying order over the weekend with my brokers for execution on Monday. I’ll be buying the Sarisin Food and Agriculture Opportunities Fund up 2.55%.

This is an ‘old friend’ that I got shaken out of in the recent volatility. It’s always a real pain buying back into something at a higher price than you recently sold it. But again, a systems a system.

This purchase will take my Great British Trade Off account up to 68% invested. Only last week I was wondering should I reduce my exposure to below 50%. Funny old world init, market sentiment and direction can change very quickly.  As a momentum investor I have to follow around behind the market, which at times like this isn’t easy.

The problem is that one minute ‘Mr’ Market wants to dance on the table the next he wants to sit under it and slash his wrists. Let’s hope he’s taken his medication and calms down for a bit.

 

 

 

The Great British Trade Off

A calmer week in the markets, but fears over Syria and a possible trade war between the US and China loom large

The FTSE 100 (UKX) is up + .1% on the week, my portfolio is down -.1%. Basically both are flat, a move of .1% either way is neither here nor there. Although in the case of my portfolio, I was down rather more earlier in the week, being – .3% down at the close on Wednesday, thankfully it pulled back somewhat yesterday and today.

As the excellent Sharescope chart shows, it’s been a calm week for the index, after quite a lot of recent volatility.

Is this the calm before the next storm, well who knows I certainly don’t. But with the current military tensions over Syria and the possible trade war between the US and China, nothing would surprise me and I doubt it would surprise you either.

Mind you there’s always something going on somewhere isn’t there? It’s interesting how some stuff spooks traders and investors and some stuff doesn’t, I am just crap at judging what will and won’t move the markets and have given up trying to get a handle on it.

As I write on Friday evening, I’m 62% invested. There’s nothing I want to buy for the coming week, but I have a possible selling dilemma.

The Neptune Global Alpha Fund and the Neptune Emerging Markets Fund are both right down on my stops. When something’s sitting on the wire it’s never an easy call. When they go through my stop it’s an automatic no-brainer, but here they’re both in the discretion zone.

The question is do I take the hit (it’s only a couple of hundred quid on each) and free up £15k of capital? This would reduce my market exposure to 46% which might be good if all hell breaks out next week might it not?

On the other hand as the charts show, the MACD indicator is rising and this is a strong signal that the price is likely to go up.

I shall go for a walk and wait for the US markets to close to see if this gives me any clues as to what I should do. There is a great quote from Frank Gretz of the American capital management firm Wellington Shields as reported by the news wire Barrons. ”It’s the last hour of the day that’s really going to matter, as the market open is known as amateur hour, while the last hour is dominated by the smart money”.

Following the smart money is always a good plan

 

 

 

6 April 2018

 

Sorry about the April Fool’s posting on the 1st; yeah I know it was a bit childish, but hey after the year I’ve had I needed a bit of light relief.

To business, first of all I want to offer MONSTER congratulations to Fagin on not only winning the Great British Trade Off (GBTO), but by beating me by such a wide margin. He’s turned in a brilliant performance this year and whilst my own efforts were patchy at best and very poor at worst, nevertheless he would have won no matter how well I might have done.

A stunning result. Well done him.

There’s no way a sensibly diversified investor, rather than a trader, can generate those kind of returns without taking the kind of stupid risks that can so easily blow up an account (i.e. betting a £1k a point on the Dow (DJI)) and given that I invest to be financially free and for my eventual retirement, that’s the last thing I would want to do.

The purpose of the GBTO was to establish, is trading more profitable than investing? And whilst one year isn’t a long enough period to be certain, my guess is that even after another few years the answer is still going to be trading. Albeit trading as Fagin does it requires a great deal of hard work, whereas, by contrast, the way I now invest only takes about one hour a week. So we are comparing what is almost a full time job to something that takes no time at all.

But regardless of that, with the kind of results Fagin’s been banging in month after month last year and so far this, if he keeps that up in the future the writing’s on the wall me thinks, trading is very likely to be more profitable than investing.

So if that is, or is becoming my view, and given that I’m trying to increase my wealth, why do I only want to be an investor, if trading IS likely to be the better vehicle to make money? The answer is complicated, after a health scare last year that proved to be nothing, I had a serious rethink about everything I was doing and how much time and effort it was taking me to do it.

There’s an old gag that the only free lunch in the stock market is diversification, it’s also very true that equity markets are volatile. Now that volatility can be a hugely powerful engine for profit if its judged correctly as Fagin demonstrated last year, but it can also shred your money if you get the wrong side of it, or your just plain unlucky.

For me, lunchtimes haven’t been as good since I stopped drinking, but even so I decided to take the free lunch that diversification offers and the bulk of my stock market monies from now on will only be invested in funds, thus spreading my risks far and wide, or sitting in cash in times of danger. Fagin will argue differently about the risk that is inherent in taking large positions in single stocks but I believe that by spreading risk all over the place on the one hand I’m unlikely to lose all my capital with a flash and a bang, the trade off is that I’m unlikely to generate the returns he does when his system is working well. But nought is for nought as they say.

Even so I’m looking forward to the next round of our competition starting in a couple of day’s time. I must say I learnt a lot of hard and expensive lessons from last year’s GBTO and am quietly hoping that that experience will stand me in good stead going forward and whilst I doubt I’ll win next year’s contest, I’ll be very disappointed if I don’t make a decent return for myself in what must surely be close to the end of the current bull market.

Let’s look at some of those hard and expensive lessons that I trust I’ve learnt. By nature I’m a risk taker and a trader, so although I wanted to become an investor to give myself a calmer easier life, to begin with I found the different approach I needed to adopt was almost alien. My four biggest mistakes were:

  1. Not catching momentum

I’m reasonably good at spotting short term upward momentum in individual shares but I found translating that ability into the longer time frame I needed to make the bigger but slower generated profits all but impossible. Taking a view on the likely course of events over ten days is much easier than taking the view over a number of months or years.

  1. Putting my stops in the wrong place

I believe that avoiding a capital loss is equally important for both a trader and an investor, but for any given share the stops need to be in very different places depending on your likely holding period. Early on in the GBTO my stops were too tight and I wasn’t allowing my positions enough room to ebb and flow, all too often I was tipped out of a trade that subsequently came good, then I did something equally stupid and made them too loose  running up needless large loss’s as a consequence.

  1. Failing to do effective fundamental analysis

Companies will always put a spin on what they’re doing and will always present their figures in the way that suits them best.

Paul Scott of StockopediaRobbie Burns aka The Naked Trader and Fagin and my friendsTeresa Day and the Wheelie Dealer are all world class at drilling down into sets of accounts and sorting the good from the bad from the fraudulent.

There are no two ways about it, this is something I’m crap at and doing it makes me lose the will to live anyway. I tried hard to invest in strong companies with good prospects that were unlikely to suddenly disappoint the market and that were displaying worthwhile medium term momentum, very difficult I found. I had some successes but not enough of them.

  1. Not sticking to one proven system and also making things too complicated

I wasn’t consistent enough in my approach and I chopped and changed my ideas too often. I started the competition using the weekly signals generated by the system that Fagin and I used, allied to my own (inept) fundamental analysis as well as trying to balance and to some extent hedge the various positions, I wasn’t getting good results and started overriding my own rules. I wrote at the time that I fetched up with a camel when I’d been trying to design a horse.

The whole thing was way too complicated, too clever by half and just didn’t work for me.

But here’s the thing, in-spite of making numerous errors of judgement, sometimes investing in the wrong companies at the wrong time, changing systems as I went along, twice being hit with a profits warning and a couple of times just being unlucky nevertheless one year on, even after a very bad March the bulk of my capital is still intact.

In times of either crisis or danger my traders instincts have served me well; let’s hope my alter ego continues to be my guardian angel for the rest of my investing life.

It could have been so much worse, just suppose and imagine how much fun it could be watching Bitcoin run up to $19k before Christmas and deciding this is how to make your fortune as it goes to $50k.

You’ve not got any real money but you’ve got £20k on a subprime credit card at 29% APR and a spread betting account. The £600 or so in monthly fees and interest that the credit card is costing you is the least of your worries, the grown up problem is meeting the spread betting company in court to explain how you’re going to pay them the £200k plus costs that you owe them as instead of hitting $50k Bitcoin slumped to $8k.

Think I’m joking? Think again, this is the sort of scenario some guys have faced, having literally lost everything betting wildly on Bitcoin and indeed not just Bitcoin.

There are some very sad stories out there, google ‘Bitcoin loss’s’ you’ll see what I mean.  As a side issue, if you want a great read about some wild gambling, there’s an old book from fifteen years ago by Jonathan Maitland called ‘how to make your million from the internet (the diary of a share trader)’, recounting how he re-mortgaged his house for £50k and tried to turn that money into a million pounds in a year by investing (if that’s the word) in ‘internet companies’ at the time of the dot com boom and bust.

A long time ago I worked on the same radio station as Jonathan, he’s a great broadcaster and a talented and very funny man; I particularly commend the chapter where he discovers spread betting to you, I began to cry with laughter as I read it. Jonathan had the nous as well as the media and market connections to make up the monies he lost spread betting by other means, so all ended up well in the end. But it was one hell of a ride while it lasted. It’s both a great read and a salutary lesson at the same time.

Back to me, the first two thirds of the GBTO were not good, but my trader’s nous kept my losses under strict control enabling me to fight another day. Since October/November I’m solely invested in funds (with a safety position of cash), have an automated system for buying holding and selling in place that I did ten years of back testing on and follow without deviation and in-spite of the flash crash of February and the most recent decline things could be a lot worse, although the last month has been pretty grim.

March has been my worst month of the year by a wide margin, to put it in perspective, in round figures my loss for the month isn’t far short of my loss for the previous eleven months put together.

My system looks to put me into trends, it back tests well but it’s vulnerable to being whip-sawed in and out both at the end of an old trend and the possible beginning of a new one.

Except for my Japanese holdings everything else fell back in value quite sharply, although only four of them have so far fallen down through my stop loss. The four I lost were the Fidelity China Consumer Fund for a loss of £308.87, the Fundsmith Equity Fund for a loss of £384.36, the Goldman Sachs BRIC’s Equity Fund for a loss of £271.30 and the JPM Emerging Markets Fund for a loss of £263.16.

I finish both the month and the year down -£7708. Going forward, my head’s in a calm good place and I’m confident my system will produce profits or keep me out of trouble once clear market direction comes back.

Finally Fagin and I have launched our own website, do check it out if you’d like to at www.seekingfinancialindependence.com

 

 

2nd April 2018

 

Humbug comes clean – £2m up? no – it was an April 1st ruse; but who’s the fool?

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.

 1st April 2018

 

Humbug Strikes Back – and how!

 

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

25th March 2018

Fagin learns some painful lessons as emotion creeps into his trading; he’s £10k down since Christmas

‘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!

 

Obvious lessons learned: 

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!

 

Less obvious lesson learned:

 

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!

 

‘Calm is good’ – Fund trading Beast from the East (Sussex) reflects on a tumultuous month:  Running total -£3657

In spite of that, all is good round here, beast from the eastI 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:

Technology/Robotics

 

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.

China

 

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.

Emerging Markets/Undervalued Assets/Income

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.

Fundsmith

 

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.

UK Smaller Companies

 

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.

Japan

 

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.

America

 

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/Russia/India China – the BRIC economies

 

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.

Food and Agriculture

 

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.

Humbug strikes back as his fund portfolio gains almost £3,000, but he’s still – £1515 overall

 

The loss when I liquidated the original portfolio was -£4461, the profit on the new fund portfolio is +£2946; a net position of -£1515.

 

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.

 

China

£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.

 

Emerging Markets

 

£2k in JPMorgan Emerging Markets at £3.191 and £2k in Neptune Emerging Markets at £1.67

 

Technology

 

£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.

 

 

 


Fagin is up an astonishing £40,775 (40%) in just eight months – he’s making Larry look miserable. Is he cocking a snook at Humbug? Not a bit of it.

Men’s courses will foreshadow certain ends, to which, if persevered in, they must lead,” said Scrooge. “But if the courses be departed from, the ends will change.

Charles DickensA Christmas Carol

 

 

Dear all

 

Once again I have had a very good time in the market these last weeks and my portfolio is now at an all-time high – I’m almost embarrassed at how easy it has been.

I only had a couple of wobbles in the last seven weeks once again by staying in a little too long.  I had an issue with EVR Holdings (EVR) and an issue with KAZ Minerals (KAZ) in each case losing 3 times my risk. It can happen as these shares sometimes move 5% in a day and my exit is based on a close below an 8 EMA,l. Apart from these two blows I have had a series and a mixture of both steady and quick winners.

I got very lucky with GVC Holdings (GVC) announcing their takeover of Ladbrokes and I have also benefitted greatly from the recent rally in gold. I am looking forward to the last few months of the Great British Trade Off competition.

I read Humbug’s post with interest as he attempts to make his investment strategy work.

We had a wonderful dinner together last week – his knowledge of funds is now second to none and I am looking forward to co-authoring his winning system with him as he suggests!

I will use the opportunity to bang on again about the virtues of sticking to one working system and the benefits of avoiding the chop and change.

He has been extremely generous towards Fagin’s Gang this Christmas with buckets of sweets and Christmas cards stuffed full of cash; a truly lovely man.

If I have learnt anything in the last nine months it is these six things: do my homework, be disciplined with losers, follow one system, be patient with the market condition, account over a block of trades by keeping a journal and don’t be greedy.

I currently hold Highland Gold Mining (HGM), GVC Holdings (GVC), Legal and General Group (LGEN), JD Sports (JD.), Scapa Group (SCPA),  DS Smith (SMDS), KAZ Minerals (KAZ) and Halma (HLMA).

As I write here at the end of December my account stands at £140,775.57; nearly a 41% gain so far!

Finally, I’m just about to sit down and watch the Muppets Christmas Carol with my youngest daughter for the umpteenth time, it only leaves for me to hope you had a very Merry Christmas, have a Happy New Year, ‘and as Tiny Tim would say; ‘God Bless us, every one!’

 

 

Yours, Fagin

 

 

 

So, honestly now – which one did you click first?!

 

Here’s to picking the market’s pocket in 2018.

 

Yours, Fagin

 

 

 

End of term report – Humbug down £3,970, and nearly £40k behind Fagin: could do better, but all of a sudden his fund strategy seems to be paying dividends

‘I went up to ‘The Smoke’ to dine with Fagin a few days ago and was deeply impressed with how smooth his trading operation has become, he’s very close indeed to being right in the zone where he no longer thinks consciously about what he’s seeing and re-acting to, he’s almost at the point where he trades instinctively.

Good stuff, good stuff indeed.

Me? Yeah, right – what can I say? Well I’m not a bad trader, but as I’ve demonstrated this year I’ve got it all to learn as an investor.

But I’m so focused and hungry to learn that it’s going to happen and as I wrote last time, it needs to happen sooner rather than later and I’m determined that it will.

Spotting very short term momentum isn’t easy, but it’s a great deal easier than spotting medium to long term momentum I’ve found. So, I’ve had a total re-think that I hope is going to get me round the problems I’ve encountered in the last eight months.

Whilst I may well take short term trades in individual shares for my own account, they won’t feature in my dialogue about the competition that Fagin and I are engaged in (The Great British Trade Off), here I’m only going to write about my battle to demonstrate that long term investing is a better way to build wealth than short term trading.

My original idea at the start of the competition was to construct a little mini hedge fund, trying to pick shares that not only appeared to have momentum but that also fitted together into a balanced portfolio. I achieved the balanced portfolio bit quite well, what I failed to do was get the momentum.

So, going forward my plan is not to worry about balance, all I want to see is momentum. I’m going to sub-contract out all the research into what shares to buy by only investing in funds and I’m going to pick which funds to hold at any one time by using a self designed heat map that uses a combination of big picture thinking on my part allied to my love of charts to confirm that my thinking is (at least at that moment) correct.

Fagin and I co-operate together behind the scenes more than you might think, given that we’re competing with each other. He doesn’t know it yet (but he’s going to find out by reading this) that he’s got a treat in store. Our next meeting is going to be all about me and nothing but me.

What I’m now trying to do is very much a work in progress and I need his input into what I’m doing and perhaps even more to the point what I’m not doing. My plan is to get a system in place that just about runs itself, taking about half an hour a week of my time. How lucky is Fagin, getting co-opted into helping me design the system that beats him?

Let’s now look in detail at my current thinking and present holdings.

The thinking about the big picture is easy, whilst I’ve no idea where markets are going in the short term and what the news will be tomorrow, there are a number of themes running right now that are compelling.

They are that high tech is going to play an ever greater part in all aspects of our lives, that Japan at long last has a prime minister who understands how to get his country’s economy growing (if only we had the same, I personally can’t think of a single UK politician who has a bloody clue, most of them would struggle to run an ice cream stall at the seaside on a hot day) that China is hell bent on economic world domination, that emerging markets are not constrained by red tape like those in the West, that small companies are more likely to grow faster than large ones, that at this stage of the cycle high yields are better than low yields, that the fund manager Terry Smith of Fundsmith really does know what he’s doing and has lots of skin in his own game, in other words he’s invested very heavily in his own funds so his interests are exactly aligned with me as an investor in his fund and that the US is going like a train.

It’s going to take quite a while for me to be fully loaded, currently I’m 40% invested with my money spread across 21 different funds. I’ll be increasing my stake in each one (and maybe others) if and when they trigger the ongoing momentum signals I’m looking for on my charts and equally will reduce or cut my positions completely if they falter.

 

Technology

 

I’m worried about the current very high valuations the market has on this sector, but feel I must be in it because it’s obviously going to be such a driver of economic growth going forward.

I’ve £1k in AXA Framlingham Global Technology, £3k in Neptune Global Technology, £3k in Pictet Robotics and £3k in Polar Capital Global Technology.

I’m late to the party and so sadly haven’t had the benefits of their past performance as all four funds have performed brilliantly this year, being up 33%, 31%, 30% and 45% respectively.

I’ve also got an opening £1k in the AXA Framlingham Robotic Fund. This fund only launched in February 2017, but is going like a rat up a drain-pipe having gained 24% in ten months. I’m betting that they’ll all continue to do well in spite of the stretched valuations.

 

Japan

 

I’d like more exposure to Japan, but am being patient and waiting for the next suitable buying opportunity. The outstanding fund in the sector is Legg Mason IF Japan Equity Fund Class X (currency hedged) which is up a fraction under 50% for the twelve months to date; I’m holding £5k worth.

 

China and Hong Kong

 

This market corrected quite sharply for a couple of weeks in late November/early December, just after I’d topped up the three funds I’m holding, which is the risk I always run as I’m buying into actual momentum.

Not ideal, but nothing got anywhere near my stops and in the last couple of weeks the upward trend has resumed, so all is good.

I’ve £4k in Old Mutual China Equity, £3k in Gam Star China Equity and have very recently opened a £2k position in Baillie Gifford Greater China Fund. Over the last year this has been the star performer, up 50.4% and provided this superb out-performance continues it is the one I want to be over weight in next year.

 

Fundsmith

 

Terry Smith, the force behind Fundsmith is a legend; generally speaking I’m not a huge fan of the cult of celebrity having met and interviewed many of them in my time and let me tell you most of them are shallow self important tossers – however Terry Smith is anything but.

Google him and read his blogs, he talks total sense. His approach to finding companies to invest in is so blindingly simple as well as sensible, that I’ve devoured his thinking and love it. I’ve currently got £3k in his Fundsmith Equity Fund, however he’s got hundreds of millions in it and I’m happy for my handful of pennies to be riding on the back of his money. The fund is up 23.65% in a year which means on my calculations that he’s made over a million pounds a week from his investment.

Can I say it makes a nice change for a company boss to be earning millions simply because he’s got serious skin in the game, rather than from the hopelessly over generous remuneration package with its golden hello, ludicrous salary and expenses, share options and all mighty pay off for failure after ‘he’ leaves, having destroyed shareholder value, that so many CEO’s enjoy at the expense of their ordinary shareholders. I’m a big fan of Terry Smith (you don’t say……..Ed).

Lord Lee who is also something of a legend (shame he doesn’t run a fund, I’d invest in that if he did) is also a great fan of skin in the game.

From the point of view of little people like us, hitching a ride with a CEO whose personal wealth is very tied into his business has to make sense. Sure, they won’t always make the right decisions, but one thing you can be certain of, is that they won’t be ‘betting the farm’ on some gormless idea to boost their own ego.

 

UK

 

As I write I’ve holdings in five UK focused funds, with just a £1k opening holding in each. If the ‘Santa’ rally continues next week I expect to be topping them all up. Man GLG Undervalued Assets and Man GLG Income Fund do what they say on the tin, the other three are, Janus Henderson UK Small Companies, Marlborough UK Micro-Cap Growth Fund and the best performer in the last twelve months the Jupiter UK Small Companies Fund up 41.76%. In line with my policy of going where the action is, all things being equal this is the one I expect to be heavily loaded into in the coming months.

 

Specialist/Emerging Markets/High Yield/Global

 

I’ve £2k in the Sarisin Food and Agriculture Opportunities Fund, in a world with a rising population the need for food isn’t likely to go away anytime soon. £1k in the Neptune Emerging Markets fund, up 29.5% this year and £2k in the JPM Emerging Markets Fund, up 33% this year. £2k in the Invesco Perpetual High Yield Fund up 9.4% and £1k in the AXA Pan European High Yield Bond Fund up 6% and finally £2k in the Neptune Global Alpha Fund. The operative word in that one is ‘alpha’, it’s up 25.4% in a year.

 

So there we have it for 2017, with hindsight I wish I’d adopted this fund based investing model from day one of the competition. Just look at the percentage increases these funds have enjoyed this year, had I been in them from the outset instead of being four thousand pounds down I’d be over twenty thousand pounds up.

Sure, Fagin would still be in the lead but I’d be close enough to be keeping him looking over his shoulder and worrying.

Oh well, never any point in ‘if’ ‘cause ‘if’ didn’t happen did it? Here’s to a happy and prosperous New Year and my resurgence in the Great British Trade Off.’

 

 

Yours aye, Humbug

 

 

Santa Bounce? No. Trying to create a thoroughbred, Humbug’s ended up with a camel – down £4684.93 he’s got the hump and is turning to funds

Well I’m extremely glad that Fagin has accepted my long term challenge to run the GREAT BRITISH TRADE OFF not just for this year, but for a number of years thereafter, because if it was a one off competition for this year only I might as well give up now. I came back from sailing a few weeks ago a couple of grand down and then guess what? Ten days after I got back I found myself four and a half grand down.

Laugh? You know what, I thought I’d never start.

I know the market naturally ebbs and flows, but it would have been nice if the shares I picked didn’t just ebb.

A number of things to say; whilst, believe it or not, I’m enjoying learning the hard way how to be the investor I want to become, rather than being the trader I’ve been all my life, clearly I need to begin to get the hang of it sooner rather than later.  My share selection was all in the UK market and whilst I stand by the comments I’ve made in previous postings about being happy with the way I constructed the overall mix of them to complement each other, I have to face the fact that time and time again the initial price momentum that attracted me to them failed. My difficulty has been to know if this was just that ebb and flow that prices experience or was it the start of a real decline.

Sometimes I’ve not stopped  losses quickly enough and just threw my money away as things set sail for the south pole and sometimes I’ve done the exact opposite, stopping out too soon and yeah, just throwing my money away as they reversed back up and then posted the gains I’d been looking for.

As a trader I’d have welcomed the volatility, as an investor looking for a much larger gain by taking the risk of holding a position for potentially much longer I’ve made numerous wrong calls.

Oh well, as an experienced trader but very inexperienced investor I just have to accept that it’s all part of the learning curve. After all, private education is never cheap.

The expensive lesson I’ve learnt in the last few months with individual shares is that you either trade them quickly using a mechanical system as Fagin does so brilliantly, or you really do hold them for the long term. Banking the dividends and taking no notice of where the share price goes. The mistake I’ve been making since this competition began in April is to have a hybrid model that falls between the two ideas and it doesn’t work.

When in a hole, don’t keep digging. I decided to look long and hard at all my individual shares, asking myself the question ‘am I prepared to hold this share almost forever, no matter what happens to the price and through any and all difficulties the business encounters?’

Sadly the answer in every case was no, I’m not that confident. Sure I’d bought each one because I liked their current position and with an eye to how they blended together to form a balanced portfolio, but hold through a fifty or sixty percent drawdown? Er, no.

Result being that my broker made money on the commissions as I sold them all, whilst  some of them were well in profit, in total there was a couple of thousand pounds loss, so by selling I converted  a paper loss into an actual one.  Duh! I also closed out my spot gold trade for a loss of £30; it had been in profit at one point but had spent most of its time well under water. Shame, but just one of those things.

In fact the whole experience from April is a shame. My initial plan was to take positions that balanced each other, riding medium term waves and banking profits after a few months of holding. It hasn’t worked and the reason may well be because instead of just focusing on a shares momentum I also tried to find candidates that balanced each other.

camelMaybe when you use too many criteria at once you wind up with a camel when you were in fact trying to design a horse. I then had a brainwave and decided to push the rules of the competition right to the wire by planning to take leveraged trades after the market volatility that often occurs in the autumn had passed. I’ve chickened out of that one; if I’m getting it wrong time after time why gear up the losses?

It’s one thing accidentally dropping a tenner out of your pocket as you walk down the street, it’s entirely another matter to be taking them out of your pocket and throwing them in the gutter as you go.

So, 4.684% down after eight months; utter crap on the one hand, but not the end of the world on the other.

The vital thing when you’re looking to take money out of the markets is not to lose your stake (your capital). Ninety five thousand isn’t quite the same as a hundred thousand but it’s OK, the bulk of the capital is still intact.

Going forward I’m re-launching my whole focus, turning my back on individual shares and their short term volatility and investing in funds only. I’ve held a small amount of money in funds from the start of the competition and on balance it’s worked out well. As of November 30th the monies invested in those funds was 2.4% up.

I’ll update you in quite a lot of detail on exactly how I plan to make this work next time I write. If that’s not before Christmas, let me wish you a Very Happy Christmas and let’s hope we all make our millions very soon.

 

Yours, aye

 

Humbug

D2 Interactive