We are now down to the last few Places with 38 People saying they are coming along - so it promises to be a really fun event with lots of ‘old’ faces and a load of ‘new’ faces as well - I am really looking forward to it. It is taking place on Saturday the 15th September from about 12 Noon ish and everyone is invited - it is in a Pub near Windsor and Legoland - ‘The White Hart’ at Winkfield.
More details are on the Homepage (you need to scroll down - just like everything on my totally User Unfriendly Website !!) - please contact me if you want to come and I will add you to the List. There is no charge or anything and you just come and go when you like - committed Diehards will probably still be there at 11pm. Beginners and experienced People and all skill levels in between are coming so we should have a really good crowd.
A lot came out about how these were going on Friday. Dominic Raab and Michel Barnier seem to be in agreement that they are aiming to get the Talks concluded in time for the European Council Meeting which I think is around 18th October. Apparently if a Deal cannot be achieved, then the European Council will convene in mid-November for an ‘Emergency Meeting’ - this would obviously be a bad state of affairs because it would result from ‘No Deal’ and I suspect Markets won’t like this at all.
An interesting and important thing came out in the Sky News Paper Review on Friday night. According to Alex Deane, a BBC Brexit Correspondent (I am not sure of the guy’s name but I suspect I know which one it is because he has been totally immersed in the Brexit stuff for months and he often appears on the Daily Politics with all his huge paper files !!) had said that before the latest round of Talks 80% of the Deal had already been agreed and these Talks have resolved another 3% or 4% so the Discussions are really getting down to the final and most difficult issues - but I think this looks like a Deal will get done - and if they cannot resolve it, I think it is highly likely that there will be an Extension to the whole Process to allow a resolution. All parties know the Risks around not getting a Deal are significant and Politicians value their Jobs far too much to risk upsetting the Voters.
The thing that people miss here is that whilst the Media and Politicians go on about the ‘Big Beast’ Personalities and all the Bust-ups and Twists & Turns of the Brexit fiasco, there are 2 huge teams of Civil Servants on both the EU and the UK side that have been meeting for months and months and months and quietly getting on and resolving the Issues to create the Legal Basis for the Deal and the Documents etc. that will need to be Signed by the Parties. Of course once the Deal is sorted in time for the Council Meeting it then needs to go to the individual Parliaments to be ratified which could prove interesting !!
It is all very painful but it looks to me like a Deal will get done. Whether it is a Deal that keeps Leave Voters or Remain Voters happy is entirely a different issue !!
It really strikes me that the EU side of getting a ‘Deal’ will be manageable and some sort of fudged concoction will emerge but the trouble will more likely be around trying to get it through the UK Parliament. However, if T May puts it to The House that the choice is her Fudged Deal or ‘No Deal’ then I suspect there could be a majority of MPs who would go for it. There are many ‘Extremists’ on the Tory side (personally this annoys me because they simply want what Leavers voted for !!) who say they are against the Chequers Plan but I suspect that they might settle for a Fudged Deal that has been approved by the EU if it means Brexit goes ahead and then in the future they can finish the job off and properly get us out of the EU - this is the pragmatic stance of people like Liam Fox and Michael Gove who you would normally expect to be ‘Extremists’.
I have also picked up on some other twists to this turn of events. I was watching ‘Dateline London’ on BBC News 24 on Saturday and it was mentioned that Michel Barnier has faced two significant changes to how he is ‘negotiating’ just recently. Firstly he is under enormous pressure (and the EU in general with the likes of Jean-Claude Drunkers getting it in the neck) from the Ports within Europe which will be impacted like in the Netherlands, France, Belgium, Scandinavia etc. and also from European Manufacturers and Exporters who want how they deal with the UK to remain as similar to today as it can be. But probably more of a driver is that Barnier wanted to be the next President of the EU Commission and to be Junkers’ successor but President Macron has put the mockers on this by lining up some Danish Lady to take the role (I think her name is Verstiger or something - she is the Competition Commissioner at the moment). This means that Barnier is desperate to salvage something from his ‘Career’ and is eager to be ‘the Man who sorted Brexit’, and of course this means it cannot be a disaster !!!
Another interesting development is that it looks like Theresa May is toast whatever happens but it is important for her (in a similar way to Barnier) to salvage some credibility by being ‘The Woman who sorted Brexit’ - or otherwise she will simply go down as ‘The worst PM in history’ (and there are a lot of competitors for that title !!). The other interesting twist is that if Brexit goes smoothly in terms of the EU end of things (and it is starting to look like it will - Northern Ireland is the problem but that will get ‘fudged’ and sorted out in the ‘Implementation Period’) then it could look very good for Dominic Raab. He could therefore be a very good potential Leader of the Tory Party and hence the next Prime Minister - he would appeal to ‘Leavers’ because he voted ‘Leave’ and it seems the ‘Remainers’ like Anna Soubry and Dominic Grieve might find him acceptable in preference to Boris who seems to be far too divisive in the Tory Party to actually become Leader. This could be interesting because Raab is relatively young and much more in the David Cameron / Tony Blair mould (it is debatable whether or not this is a good thing !!) which might make him more electable and I have no doubt he could take the fight to that appalling markist/racist Jeremy Enoch Corbyn.
There is much talk that T May will get challenged but the timeline seems to be that an EU ‘Deal’ can be cobbled together before the Tory Party Conference which is when she is most likely to face a challenge - so any new Leader might be faced with going with the EU Deal or starting the whole thing from scratch which would probably mean ‘No Deal’ and a right old mess. We need to watch out for this but it is likely that we can limp through most of Autumn as news about an EU Deal leaks out and the real fun will begin after this. Having said that, expect weak Markets in the Autumn because that is the usual Seasonal Pattern and this year we have so many Macro issues to layer on top (I haven’t even mentioned the US Mid Term Elections in November…….)
Interesting times we live in……(in the sense of the Chinese Proverb where you wish Bad Luck on your Enemies - “May you live in interesting times”.)
The incredibly boring Markets of recent Weeks have continued and last Week my Portfolio was up about 0.2% across everything - I guess I am quite happy to be ‘treading water’ and not having to endure much damage but I do find it very uninteresting. I am sure all Summers are difficult but this year has been a shocker and I am bored to tears by it all !!
Of course September has the reputation of being the Worst Month and we could easily get more slides across the Month (a typical September sees 4 down weeks). Having said that, it seems that the Markets are pricing in Brexit Disaster and as it dawns on Market Participants that a Deal will most likely get done we might find some Buyers start to appear and there is a possibility that Autumn this year could be better than usual. It is hard to know so for now I will continue being very cautious and not really doing much - with a bias towards selling stuff and increasing Cash Levels if anything.
“If in doubt, do nowt” as Steve Markus would say (@smarkus on the tweets).
This coming Friday we have the US Non-Farm Payroll Numbers and this could cause some ‘action’ around 1.30pm. Other than that it is ‘Labor Day’ in the US on Monday so they are closed.
I certainly mentioned it on Twitter and I might have scribbled about it in last Weekend’s Blog, but anyway I have taken it upon myself to write some Checklists that I can use when I am Buying a Stock which is like a sort of ‘Final Check’ to make sure I am not buying a dud. Of course it makes sense to make Blogs out of these so last Night I made a start and I figured that I would do a ‘Buy Checklist for an Income Portfolio Stock’ first because I realised that would be easier to write. So I bashed that out and it is in a pretty good shape as a Draft but needs a bit more refining.
I now need to move on to a Buy Checklist for my ‘Normal’ Portfolio (the WD40) but it has struck me that this is not as easy as it at first appears. The complication is that such a Checklist will need to vary depending on which ‘kind’ of Stock I am buying. For example, a Buy Checklist for a Growth Stock would probably be diffident to a Buy Checklist for a ‘Recovery’ Stock - although a lot of the Questions involved would be the same.
Then I remembered what I had written about recently in a Weekend Blog about following the Warren Buffett philosophy of buying ‘Quality Stocks at fair Prices’ and it struck me that this was different really to a Growth Stock or a Recovery Stock so that means another Checklist !!
So as it stands I will probably be producing 3 more Checklists - I have yet to resolve the contradictions implied by me saying I want to go all Warren Buffett and then also talking about Growth Stocks and Recovery Stocks - I will worry about that ‘problem’ afterwards !!
Last Week I published the first part of the Blogs on ‘The Diminishing Problem’ and this got quite a response on Twitter etc., which I thought it would. Part 2 is in pretty good shape (I added some bits to it tonight before doing more work on this Weekend Blog !!) and it should appear later this coming Week but I am quite busy socially and have Quiz Night at the Pub on Thursday - so I have no idea when it will appear !! I am also aware that August is now complete so I need to update the ‘Weekly Performance’ on the Homepage at some point - that might have to be next Week then. I also need to update the ‘Little Black Book’ so I have plenty to keep me busy.
Oh, and I am tempted to do a ‘Buy Rationale’ Blog for a Stock I fancy buying - although I won’t be buying it for a while yet. It has been a while since I did a Stock Blog so I fancy doing one for a change and it means I can get my Research done well before I am ready to Buy - but the Stock I have my eye on is a classic Buffett ‘Hold Forever’ Quality Stock.
Into the Black Hole of time…….
I remembered the other day that I had written something like 5 Blogs about my ‘history’ as an Investor and how I developed etc. This is quite a recent set of Blogs but I am getting new Readers all the time and I think quite a few People will not have seen these but will really enjoy them - you can find them all here:
Blackthorn Focus Event
You might have heard of my friend David O'Hara, who runs Blackthorn Focus, an investor events company and publisher of AIM Prospector Magazine. Back in 2013 he started a government petition that called for an end to the ban on AIM shares in ISAs, a change that I think all private investors welcomed !!!
David is running another of his investor access events on October 29th, featuring three Quality AIM companies. This is the AIM Investor Focus event, which has previously had some of the very best companies on AIM in the time that it has run (Nichols, James Halstead and Wynnstay are just three), making some excellent companies available to ordinary investors who might normally struggle to hear from management away from AGMs.
AIM Investor Focus has an impressive record of putting winning investments in front of its audience. The last time that the event ran was in October 2016 and the median return (including dividends) from the four companies that presented on that day is +49%. The mean average return is +45% so there has been decent consistency of the returns made.
AIM Investor Focus is free to attend and will next run on October 29th at Cannon Street in the middle of London's financial district. Three companies are scheduled to present and they are: Mattioli Woods (MTW), Scientific Digital Imaging (SDI) and Sigma Capital (SGM). Every one of these looks like a pretty decent company and each holds net cash, so no debt worries here!
Mattioli Woods (MTW) for example is an investments and employee benefits specialist with a market cap over £200m. David reckons it is one of AIM's very best companies and twelve years of dividend increases suggest he has a point. In the last five years, those dividend increases have averaged +20.5% a year. Better still, the company is being represented on the evening by Bob Woods, co-Founder. Mr Woods still owns 8.64% of the company, making him a rich man indeed! This is an excellent chance to hear from a top business person.
Scientific Digital Imaging (SDI) is one that I've known about for some time and am gutted that I never got around to buying. It is one of those smallcap companies that has done really well but is too small (market cap £40m) for most fund managers to get involved with. SDI has grown by acquiring a collection of cutting edge products companies. It is obviously doing this well, with the shares up threefold in the last two years. It’s not all been growth through acquisition either, with the last results reporting 31% organic growth. It looks like an underappreciated smallcap Stock and one that could well reward further research.
David owns shares in Sigma Capital himself and is doing nicely so far. Sigma is a builder of houses for private rental and manages other institutions' investments in that space. It has done well in the last 18 months as it has been appointed to manage the investments of PRS REIT which is also Listed, with Sigma successfully raising £500m of funds for PRS. David has told me that he is holding out for 160p-190p for his shares in Sigma and with the 2019 P/E of just 7.9 I can see why and with patience perhaps they can go higher.
Blackthorn Focus hasn't made this event public yet, as David only begun mentioning the event to his mailing list on Thursday and the event typically requires little marketing before it fills up. This is the first mention that the event has got outside of the list of past attendees !!! If you are available on the evening of October 29th and want to join the event, there is a link here where you can apply for a place:
Better do some Charts - particularly because the FTSE100 did something very ‘interesting’ on Friday (in that negative Chinese sense again)…..
As always the Charts I show are ScreenScrapes from the brill ShareScope Software that I subscribe to and if you click on them then they should get bigger for you to see more detail.
The Chart below has the Daily Candlesticks for the FTSE100 and my Red Arrow is pointing to a Big Red Down Candle from Friday which is significant because it broke down through Support just below that 7500 level - this implies it could drop more in time. Note how the Candle on Friday went below the recent Low where my Black Arrow is and it also broke-down through the 200 Day Moving Average which is the Light Blue Wavy Line (the ‘Graph Legend’ box should help you identify the Lines).
A Breakdown of Support like this is not good and I suspect we will see more falls here - especially bearing in mind it is September which is historically the Worst Month on average. If it does keep falling, then there is Support in the Zone within my Green Box from about 7326 down to 7062 and if things get really bad then we might visit 6866 which is down where my Yellow Circle is - if 6866 fails as Support that would be extremely bad !!
Note where my Green Arrow is that the 50 Day Moving Average (the Darker Blue Wavy Line) is moving down towards the 200 Day Moving Average - if it Crosses it we get a ‘Death Cross’ and this would predict Weakness for some time to come. However, if we are really going to avoid such a Death Cross then the Price needs to perk up real fast and I fail to see how this is really likely.
I always try to bore you Readers to tears with my praise of the 13/21 Day Exponential Moving Average Crosses but yet again a ‘Death Cross’ as pointed at with my Yellow Arrow has predicted Falls on the FTSE100. Until we get a Golden Cross where the 13 Day EMA crosses the 21 Day EMA from underneath - this will probably stay Bearish (although of course it can turn up a few Days before a Golden Cross which is a lagging indicator).
In the bottom window on the Screen below we have the Relative Strength Index for the FTSE100 Daily. On a reading of RSI 40 it is low but it can go lower.
Next we have the Weekly Candles - my Black Arrow is pointing to a Big Ugly Red Down Candle from last Week and this is obviously negative.
With August complete we now have a completed Monthly Candle for that month and my Blue Arrow is pointing to a Big Red Down Candle - not good. My Black Arrow is pointing to the Long Term Uptrend Support Line from 2009 - this suggests that if things get really mega-ugly, then Support around 6400 should kick in.
Next up it is the Daily Candles with the Blue Wiggly Bollinger Bands above and below. Where my Yellow Circle is the Price is touching the Bottom BB and it is possible it can bounce off here - although that is no guarantee that it can move up a lot from here even if it does bounce a bit.
From looking at these Charts the FTSE100 is clearly weak. I am tempted to put a Short on it at some point but I will see how things play out on Monday and check the Charts Monday Night. I have had a run of Short Hedge Trades that have been stopped out recently so I am very cautious to put a Short on anything.
I am sure many or most Readers have Stocks in the FTSE250 or in Smaller Cap Indexes and in many ways the FTSE250 is a proxy for those Smaller Stocks. In addition the FTSE100 is not particularly representative of the UK Economy/Markets these days as it contains so many Overseas Earners and Commodities Stocks and of course has the weirdest Weighting System going where the Top 10 Stocks account for something daft like 50% of the movement of the Index (I made that figure up but you get the point !!).
Of course the FTSE100 does influence the Smaller Stocks but at the moment the FTSE250 looks a lot prettier than the FTSE100 (and bear in mind the 100 is pretty prone to moves in the Pound as well these days). The Chart below has the Daily Candles for the FTSE250 and first off note how the Price is currently up above the Black Downtrend Resistance Line (marked by my Black Arrow) which if it holds should now act as Support for the Price (‘Previous Resistance becomes Support and Vice Versa’). My Yellow Arrow is pointing to a Long Tails Doji Candle from Friday which after the sort of Hammer Candle on Thursday which hit Support at 20600, implies we might be about to turn up.
If things don’t turn out as nicely, then it is important that the Support down where my Green Circle is holds.
On the Chart below we have the EMAs. My Black Arrow is pointing to where there was a 13/21 Day EMA ‘Death Cross’ and where my Blue Arrow is we are quite near a 13/21 Day EMA ‘Golden Cross’ which if it happens would be bullish and suggest gains in the coming Weeks. However, if you look closely you might see that the Lines are parallel at the moment and any weakness in the Price in coming Days might cause the Bullish Cross to be narrowly avoided - that would not be good because it would be a ‘Skim off’ or ‘Glance off’.
This one is perhaps a bit more negative looking. My Black Arrow is showing a sort of ‘Shooting Star’ Doji Candle on the Weekly which is pretty Bearish looking but the ‘context’ is not all that textbook as you would really want a strong run up before the Shooting Star for it to be really Bearish and mark a Reversal downwards.
But on the Monthly which is below, things are a bit nicer. My Yellow Box is capturing a Hammer looking kind of Candle which shows a nice Reversal up off the Lows (where the 200 Day MA Line is) which shows there is some buying interest. However, the context is not great because there were not loads of down Candles before the Hammer.
Longer Term things like Monthlies carry more weight than short term like Weeklies or Dailies - so perhaps the Monthly will be more near what is likely to happen now.
The US Markets are up near All Time Highs which is pretty Bullish and with the Short Week probably not all that representative of much at all. I will leave it there for this Weekend.
Good luck everyone !!
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