This should be a quick WheelieBlog - there’s some Superbike Racing on the TV soon so time is limited !!
You may have seen via the usual comms methods (Tweets, ‘Changes List’ on Homepage, ‘Trades and Portfolios’ page etc.) that I closed (sold) my Long Spreadbet on National Grid NG. and banked a reasonable 10% Profit on the Exposure and near 200% on the Capital used as Margin Deposit for the Bet, in a swift 2 months.
Don’t get me wrong - I love NG. and am keeping a huge position on it in my Income Portfolio and I will be looking to buy back in again when/if the Share Price falls back to the kind of levels I bought in at a couple of months ago around 850p. It strikes me that NG. is a typical Divvy Megacap Stock that tends to trade in a Range that gives superb opportunities to Buy and Sell the moves on a relatively Short Term basis with fairly low levels of Risk.
The reason for this ‘Ranging’ behaviour is that when the Price falls to its lower levels around 850p, the Dividend Yield gets nicely up around the 5% area and this attracts Income Buyers in. Once the Price then gets in an up ‘Wave’, it can only go up a certain amount because NG. is not the kind of exciting Stock that can ever justify a High P/E Rating and low yield as it is just too slow with regards to Revenue and Profit Growth and it is simply too boring for the people who want excitement (not me thanks, I’m too old for that stress).
So, my approach on NG. and on several other of the Stocks in my Income Portfolio is to keep them as ‘Long Term Buy & Holds’ but to then trade around the Price Moves using Spreadbets when opportunities arise. I hate to say this, but on a Stock like NG. this strikes me as pretty much ‘Easy Money’ (oh god, tempting fate there !!).
More clarity - I want to stress that NG. still has huge attractions to me and is a Stock that could form a Core Holding in anyone’s Portfolio. It pays near 5% Dividend Yield and that has been slowly rising over many, many, years. I see it as a very safe Utility Stock for the simple reason that the Government (of whatever persuasion) just cannot ever let the Electricity Supply of the Country come under question - any Blackouts or similar problems would mean almost certain Electoral Defeat - so this is a huge incentive not to meddle.
Here is the Blog I did on NG. some months back:
I won’t dwell on this, but I have stuck in the ShareScope ‘Details’ Screen as it appeared on Thursday Night when I made my Decision to Close the NG. Spreadbet. You can do the maths yourselves, but the Forward P/E Ratio for 2017 is 15.4 and the Forward Divvy Yield for 2017 is 4.88% at a Price of 919p.
I really want to focus on a couple of Shorter Terms Charts because they are relevant to my Sell Decision, but I looked at some Longer Term ones and thought I would chuck them in anyway. As usual, all Charts are as per the situation that prevailed when I made my Decision to Sell late on Thursday Night.
The Chart below is the longest I can do on ShareScope and it shows NG. right back to the start of 1997 - i.e. around 18 years. The Blue Lines I have drawn in show the Uptrend that has prevailed over those years - not bad hey? However, it must be appreciated that there have been some pretty huge swings in there as well.
In the case of NG. in recent months, you should be able to see that when the RSI gets up around 70, it tends to mark the Short Term Peak in Price Action and it is time to Sell. My Black Arrow points this out exactly with the situation that was confronting me on Thursday night.
Right, that was short and sweet. Here’s to more such Trades !!
‘Power to the People !!’