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**The Guest Blog below has kindly been donated by my mate Stuart who is reasonably new to Trading/Investing and he is exploring some 'experiences' he had on a Buy of Bovis BVS. Since writing this text BVS has put out a Warning and Stuart has now dumped all of his Holding and moved on.
On behalf of Readers and myself a huge 'THANK YOU' to Stu for creating this insightful scribble, cheers, WD.** This is the first in a series of blogs about lessons learnt by a newbie stock picker. I am comparatively new to 'stock picking' having opened my first self select ISA in August 2014. As I have discovered mistakes in investing can be expensive and although the errors detailed in this series may seem obvious to more experienced investors, I hope by highlighting them they may prove of use to some readers. Position sizing As Wheelie so often writes, investment performance should be measured by the return of the overall portfolio and not just individual 'stars' or 'dogs'.
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You clearly don’t need to be the World’s most genius Investor to figure out that Stockmarkets have had an extended run for all of 2017 and the tail end of 2016 and things are looking Toppy - at least in the Short Term if not on a Longer timeframe. I have been flagging in my Weekend Charts Updates how Markets have got quite extended and it looks to me like we might be turning down now - I am so convinced of this that I put a Short on the Nasdaq 100 back on Thursday Night - see the ‘Trades’ page for details.
As I mentioned in recent weeks, there is a lot of Support not far below on all Major Indexes pretty much so I am not expecting a protracted and panicky Sell-off - and there is no doubt that a move down would be very healthy to take out some over-done ‘heat’ and to shake out the weak Holders and enable Markets to go higher in coming months.
THIS IS NOT A TIP OR RECOMMENDATION. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITE. IF YOU COPY MY TRADES, YOU WILL PROBABLY LOSE MONEY. I HAVE A VERY LARGE PORTFOLIO AND I USE DIVERSIFICATION TO SPREAD RISK ALONG WITH TRICKS LIKE HEDGING AND OCCASIONALLY BY THE USE OF STOPLOSSES - IF YOU BUY ANY STOCK YOU REALLY SHOULD FOCUS ON HOW IT FITS IN YOUR PORTFOLIO AND KEEP RISK MANAGEMENT AT THE FOREFRONT OF EVERYTHING YOU DO. BE AWARE THAT ALL INVESTORS/TRADERS GET THINGS WRONG AND MANY STOCK SELECTIONS WILL WORK OUT BADLY - MAKE SURE YOU UNDERSTAND THIS.
Part 1 of these CAKE Blogs can be read here: http://wheeliedealer.weebly.com/blog/stock-idea-patisserie-holdings-cake-fancy-a-slice-part-1-of-2
Chris Dillow in Investors Chronicle this week, on page 15, wrote a piece called ‘The uncertainty paradox’ which talked about the VIX Volatility Index (The ’Fear Gauge’) and Political Uncertainty. Anyway, as with most of Chris’ stuff I found it a very good read but the thing I picked up from it which I had not considered before, was what a Low VIX or High VIX really means.
OK, we all know it usually means that if the VIX is low then it is likely to rise at some point and this means Stockmarkets may drop etc. but that is not really what I am getting at. The thing I picked up on is how when the VIX is low it implies that the Views of Individual Investors and Traders are actually quite different - there are Sellers of Stock who are pessimistic and there are Buyers who are more optimistic - this is in fact a sign of a healthy market.
PLEASE NOTE - THE TEXT WHICH FOLLOWS WAS ORIGINALLY PUBLISHED AS PART OF A WEEKEND ‘CHARTS’ BLOG. ANYWAY, I THINK THE MESSAGE HERE IS EXTREMELY IMPORTANT AND I DECIDED TO PULL IT OUT AND CREATE A SEPARATE BLOG AS WELL. THE IMPLICATION OF THIS IS THAT I THINK WE COULD VERY LIKELY SEE A BIG RISE IN STOCKS AND I AM POSITIONING MY PORTFOLIO THIS WAY.
Regards, WD. You may have picked up from comments I have made on the Website, but more particularly on Twitter, that I am feeling extremely Bullish about Markets at the moment and I am more than Fully Invested with a Long Spreadbet on the S&P500 and I might even add to that position. There are 2 main reasons for this - firstly the recent Breakout to New All Time Highs on the US Major Indexes (and also on the FTSE100) is Technically a very Bullish event. In the early part of the Week just gone we had a bit of a Pullback but this already seems to have sucked in a new load of Bulls and it looks to me like Markets are turning up again - Friday was especially strong after a big Jobs Number in the US (I will move on to some Charts later where I will show these moves). Secondly, despite the confusion this Price Bullishness has caused among Investors, the Fundamentals look highly supportive of this move - and a Programme I heard on BBC Radio 4 on Thursday demonstrates this very well.
Thought I'd do a recap of simplicity in trading and how it can be all lost in complex analysis and then still be incorrect, so this is a short blog on the no nonsense approach to the stock market.
My approach won't be for many but I feel it will keep you alive and finish each year with a decent gain.
THIS IS NOT A TIP OR RECOMMENDATION. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITE. IF YOU COPY MY TRADES, YOU WILL PROBABLY LOSE MONEY. I HAVE A VERY LARGE PORTFOLIO AND I USE DIVERSIFICATION TO SPREAD RISK ALONG WITH TRICKS LIKE HEDGING AND OCCASIONALLY BY THE USE OF STOPLOSSES - IF YOU BUY ANY STOCK YOU REALLY SHOULD FOCUS ON HOW IT FITS IN YOUR PORTFOLIO AND KEEP RISK MANAGEMENT AT THE FOREFRONT OF EVERYTHING YOU DO. BE AWARE THAT ALL INVESTORS/TRADERS GET THINGS WRONG AND MANY STOCK SELECTIONS WILL WORK OUT BADLY - MAKE SURE YOU UNDERSTAND THIS.
I have been aware of CAKE ever since it floated about 2.5 years ago - despite the high falutin’ name, Readers probably know this better as the Patisserie Valerie Coffee and yummy Cake shops. It has always struck me as a strong Growth Story that really relies on the rollout of new Shops and it has impressive Management with Luke Johnson who did Pizza Express driving it. For ages it has just been too expensive for me on a Forward P/E up around the high 20s but recently it has been in a downtrend (funnily enough I have seen many IPOs do this - they start off very strong then after maybe a year or so they start to go off the boil, even though the Business probably hasn’t changed at all) and it is starting to look much better value - especially after a recent very strong Trading Update. I don’t hold CAKE and I have too many Stocks anyway but I wanted to do a deeper look at them and I thought that writing a Blog would keep me off the streets and force me to really dig deep into what the story is here. Reading the recent Update on the morning it came out was what got me very interested again as they are clearly doing a lot of things right.
I have left the Blog a bit late tonight, so I won’t do much introductory blurb and will get into the pretty pictures fairly quick. The big thing for me last week was the Breakout yet again on the US Indexes (the ‘News’ blamed it on Trump saying his Economic Budget would be “amazing” or something like that), and as I have pointed out on Twitter and in various comments on the Website, I see this as extremely Bullish behaviour and I have backed that by adding to my Long S&P500 Spreadbet Position.
I saw Trump going on about his Budget in the last couple of days and I think he implied it would appear in a few weeks - this is a big focal point for the Markets - if he can get anywhere near expectations, or better still exceed them, then perhaps the Rally can keep on motoring but if he disappoints with the scale of the Plans, they maybe we will get a sell-off. I wrote in last week’s Charts Blog about how I think Trump’s Economic Policies could cause a massive injection of life into the US Economy and by extension into the Global Economy - if you have not read it then I recommend you check it out.
Readers who are actually awake might have spotted that I recently stacked the shelves in Wheelie’s Bookshop with countless copies of Kerry Balenthiran’s book - ‘The 17.6 Year Stock Market Cycle - Connecting the Panics of 1929, 1987, 2000 and 2007’.
As I cryptically commented in the text I put with the Book, here is a Guest Blog that Kerry has kindly put together for us which gives a lot more detail and explanation about the subject matter of his Book and it certainly gives something to think about. The last part is particularly worth concentrating on because Kerry shows how his Cycle ties in with many recent events and more crucially he gives a Road Map to a likely future. Kerry is on Twitter as @17_6YrStockCyc and I am sure he will be happy to discuss any connected matters and you can leave a Comment below if need be. Enjoy, WD.
You may have picked up from comments I have made on the Website, but more particularly on Twitter, that I am feeling extremely Bullish about Markets at the moment and I am more than Fully Invested with a Long Spreadbet on the S&P500 and I might even add to that position.
There are 2 main reasons for this - firstly the recent Breakout to New All Time Highs on the US Major Indexes (and also on the FTSE100) is Technically a very Bullish event. In the early part of the Week just gone we had a bit of a Pullback but this already seems to have sucked in a new load of Bulls and it looks to me like Markets are turning up again - Friday was especially strong after a big Jobs Number in the US (I will move on to some Charts later where I will show these moves). Secondly, despite the confusion this Price Bullishness has caused among Investors, the Fundamentals look highly supportive of this move - and a Programme I heard on BBC Radio 4 on Thursday demonstrates this very well. |
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