humbug & fagin

 

The Great British Trade Off is between two trading partners Humbug (because he owns a sweet shop and possibly because of his demeanour) and Fagin (because he like to pick the market’s pocket); as part of their product development and market testing exercise, for the tax year 2017/18 they decided to challenge each other to see who could produce the best return on a real life one hundred thousand pound portfolio, both using different variants of the momentum trading system they’ve developed.

 

Humbug is £2380 down but remains confident; when the going gets tough, the tough, er – go sailing?!

 

September was an absolutely crap month for me; at the beginning of the month I’d have turned the summer’s losses into a profit of a thousand pounds had the price of Indivior PLC (INDV) not collapsed on me, after a warning of litigation in the US and that was only the start of my woes.

At the low point I was £4k down, but then guess what; the sun came out.

For sure I’m still stuck in the stuff and way behind Fagin at the halfway point of The Great British Trade Off, but I’ve pulled back almost £2k in the last ten days and I’m very hopeful that the good times are about to roll.; there’s a great song from the late sixties by the Love Affair called Bringing on Back the Good Times, it’s on YouTube – here’s a trip down memory lane:

 

 

……..if I win this competition I may well have it as my theme tune.

If I win this competition and yeah, that is going to be no easy trick, no matter how well my little mini hedge fund does over the winter, Fagin is trading right at the top of his game, 20% up in six months is a blinding performance – WELL DONE HIM!

Trading and investing is very much a confidence thing and confidence is fragile. Mine got a kick in the mouth last week (even as the portfolio was recovering); I took my great little car to the BMW garage for its annual service, booked it in and talked in detail with them about what needed doing and left it there. Rang up the following day to see when I could collect it and guess what, they’d forgotten me.

‘Fagin is trading right at the top of his game, 20% up in six months is a blinding performance’

As I said at the time, ‘for crying out loud guys how many tortoise’s do you know who drive a Beemer, write for diyinvestor.net and are a dead ringer for Bill Nighy?’ ‘How could you forget me?’ DUH.

To be serious, whilst that’s a true story and the garage did forget me, my confidence is just fine. But when you’ve had a month like I’ve just had, you do need to have your head in the right place otherwise it all gets on top of you.

I wrote a few weeks ago about my intention to leverage up the total value of the £100k portfolio that is the basis of the competition, by using either CFDs or the Spreads.

To date the only leveraged trade I’ve taken was a £13k position on Spot Gold via a CFD (a couple of hundred down as I write, but still well within limits) but I’m planning to take more towards the end of October when the market should have settled down (September and October are often volatile, difficult months).

Margin trades can generate monster returns on the capital invested, but should come not just with a health warning, but a warning of INSTANT DEATH if they go badly wrong – and trust me they can.

So I’ve been wondering how to hedge them into the overall risk profile with all the other stuff I’m holding and was very interested to see this was a topic covered by a guy called the Wheelie Dealer, who does just that with his own portfolio.

If you’re interested in this idea and how to crank up portfolio returns, his website is well worth a look www.wheeliedealer.weebly.com 

He was also interviewed here on DIY recently – take a look here, its good stuff, he knows what he’s doing.

I’m off sailing for a couple of weeks and have decided to not even look at my portfolio whilst I’m away, am I being sensible in giving myself a complete break, or taking a stupid risk………………………..as always, I’ll find out soon enough won’t I.

 

Yours, aye. Humbug

 

Fagin is up £22,211 in just six months and has some fond advice for his friend

 

 

‘The plain rule is to do nothing in the dark, to be a party to nothing underhanded or mysterious, and never to put his foot where he cannot see the ground’ – Charles Dickens

 

There are so many reasons why I prefer to short term swing trade (instant gratification for one!) but two key political reasons for me at the moment are Brexit and North Korea.

Who knows what the implications will be for the UK with Brexit soft or hard; I mainly trade the UK market (sometimes I trade TNA a 3 x leveraged US ETF of the Russell Index) and I am loathe to take my eye off any purchased UK share for very long at the mo.

Hence I have found my solace in the short term market and this with the added boost from trading faster moving commodity stocks as I have said.

It may be that I miss out on the huge gains possible from long term shareholding…..

To quote Warren Buffet’s partner Charlie Munger:

‘you can argue that if you’re not willing to react with equanimity to a market price decline of 50% two or three times a century you’re not fit to be a common shareholder, and you deserve the mediocre result you’re going to get…’.

Personally I don’t have the patience or the stomach to sit through large or even medium drawdowns; my trade either triggers or it doesn’t.

‘I hate to see him lose money – he is one of the wisest, kindest and most generous men I know!’

Besides, to my mind the US and N Korea are both mad enough to push the big red button and in the ultimate worst-case scenario as Fagin’s gang and I live in London, I can look forward to the great stock market in the sky and holding my longs for all eternity. As my friend would say ‘There are no pockets in a shroud!’

The thing is, I don’t think Humbug has the stomach for those kind of drawdowns either and as I love him, I told him so.  I hate to see him lose money – he is one of the wisest, kindest and most generous men I know!

While his strategy is certainly not as flawed as Lil Kim’s and Trump’s, I think Humbug could be putting his head in the sand here and I am worried for him; here’s what I have observed….

 

Humbug’s Possibly Flawed Strategy:

 

  • He set up a longer term investment portfolio (not necessarily an inherent problem)
  • I may be wrong but it looks like he’s treating it like a short term proposition; selling positions early (You need a stomach for the drawdown if you trade for the longer term as discussed)
  • He’s taken a volatile leveraged gold position (a reasonable potential fix if you keep a hawk-like eye on things)
  • He’s now gone on holiday for two weeks and won’t look at the market (where is the trade management?!)

 

I too have a gold position in HGM (Highland Gold) but I have to watch it carefully as it can move 5% in either direction in a day or two! If I am away from the markets with no internet I believe it’s prudent to go flat.

Anyway, I hope I am not gloating just because I am winning and I hope he has set hard stops!

I wish Humbug all luck and he has time yet to win the competition – however for me; rules is rules. I am nervous for him and wish he’d asked me to look after things while he’s away! 🙂

I took a position in ASHM (Ashmore Group) this morn at 340p, initial target 360p, and I still hold HGM, KAZ, AMS, LGEN, HLMA and GVC. I cashed out of PMO and I have given back last two days with KAZ.

I am around 70% invested and I’m up £122,211.65, a 22% gain before costs thus far.

 

Yours Fagin 

 





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