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educational blogs |
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I say this every year, and I will say it again, but writing these ‘Scores on the Doors’ blogs is either a huge chore or something quite enjoyable, depending upon how my Portfolio did on the given year !!
Fortunately, despite all the plague and its associated shenanigans, my Stocks did generally pretty well and the headlines are as follows:
There’s a lot more to it than just those items, but they are probably the ones I am most interested in. There are some caveats and assumptions etc. but in the main I think the numbers I am showing here are conservative, as I will explain as I go through each Account.
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After goodness knows how many weeks of in essence just parking my butt on the sofa, I am at last hitting the keyboard once again and starting on a blog. It is quite weird and I feel like I can hardly type (usually I can sort of touch-type a little but not with much speed and constantly having to tap the ‘Backspace’ key because of the errors that emerge on my screen) but my plan is to just ease myself back into it and to type what I can tonight (it is late in the evening on Tuesday 29th December) and then pick up the remains over the next couple of nights before it goes live. Unless I get it all done tonight of course !!
I don’t intend this to be a long blog but I am just heading forth with it and have no particular plan but I just want to get back in the habit. Incredibly this is most likely the longest spell I have had of not typing anything after writing WheelieBlogs for over 6 years; and it has been sort of nice not doing anything but it is a false world and there are loads of blogs in my head that need getting down on electronic paper and out into the big wide world.
I think it could be very likely that we underestimate the role of Luck or even just simple Market Beta, whereby Markets over the long term tend to go up; so as long as we hold a large enough basket of half-decent Quality Stocks, then it is almost impossible not to make money if we are swimming with the powerful flow of the river.
I’ve been fixated by this subject for some time now and we even discussed it in the Podcast TPI 36 which you can hear here: https://soundcloud.com/user-479955511/conkers3-wheeliedealer-36-market-bounce-winners-tm17-uls-hfd-gaw-purp-arw-reci-hsp-ai It’s been obvious to me for a long time that Luck, both Good and Bad, has quite an impact on the performance of my Portfolio and I suspect many Investors (and Traders) might not fully appreciate, or even bother considering, what kind of influence Luck has.
I’m not expecting this to be hugely lengthy and I am living on the edge by having no plan or anything, but hopefully I can stitch something together that is just about readable and might even make a smidgeon of sense.
Whilst creating that ‘Educational’ Blog about Consistency & Volatility the other day (scroll down on the Educational Blogs page and you should find it very quickly), I realised that after 7 years or something of bandying around the term ‘Quality Stocks’ I had never actually made any attempt to try to define that, and this Blog is obviously an attempt to fill the gap (is ‘bandying’ an actual word? The Spellcheck seems happy with it anyway……perhaps it is something to do with Groupies……)
This is a blog I have been formulating in the deep dark recesses of the WheelieBrain for quite some time now, and finally it has pushed itself to my frontal lobes and is starting to emerge through my arthritic fingertips; and with a staccato accompaniment of the tapping of my keyboard. I remember reading in various places over time the idea that you could improve your overall Returns by reducing the Volatility of your Portfolio, and I wanted to look into this and see how true or not this was.
Now this plays very much to my obsessions with Hedging because my fixation on that is with the aim of reducing big Drawdowns on my Portfolio, which is very much in line with the goal of lowering overall Volatility. On top of this, there are a few things we can do to lower Volatility and I will be exploring those later in the blog.
Introduction
This Blog builds on one I wrote back on the 3rd September 2020 on the subject of focus and specialisation, which you can read here: https://wheeliedealer.weebly.com/educational-blogs/screening-out-to-reduce-your-opportunity-set I doubt this will be all that long (as usual with my Blogs, I tend to have little idea of how much will be in them until I actually crack on and get some text down on my electronic paper), and the approach I am using is to take some text from an excellent article that Chris Dillow wrote in ‘Investors Chronicle’ on 9th August 2019 on page 18 with the title ‘Is ethical investing doomed?’, and then I will add my own comments around this text (Chris’ text is in italic). Don’t be fooled by the title of Chris’ article, I am not really focusing on the ethical funds but more the principles around what Chris is saying. Perhaps there will be the side-benefit that we can learn something about ethical funds as a bonus !!
In the course of my travels through WD Life, I regularly meet up with Investors and Traders of various skill levels and during the invariably enjoyable, thought provoking, and helpful discussions, I get asked how to calculate the value of a Spreadbet Account and how the Cash and Margin/Deposit move around as time meanders by.
I must have repeated my blurb/explanation over 100 times (or so it seems) and it has finally dawned on me that if I write a blog about it then the people who don’t find it so easy to indulge with Beer in the Pub with me, can at least read something that might assist their understanding. It is after all, extremely important to know what you are doing when it comes to using Leverage.
On the morning of 11th September 2020, for some unknown reason it came into my mind about the kinds of Returns that people can make on Leveraged Spreadbet Accounts - and I got a bit carried away and chucked loads of Tweets out. I think there was some really valuable stuff in there and as a result I have copied the Tweets into this Blog and embellished them with some further comments and hopefully more clarity where appropriate.
The original Tweet text (with spelling errors corrected !!) is shown in italic and the new text is not in italic !!
On a recent Twin Petes Investing Podcast I mentioned the idea of an ‘Opportunity Set’ from which to pick Stocks, and I remembered that I had written a draft blog on this subject that I had not managed to finish with all the other distractions of life. From looking at the draft, I can see that I started this back in May 2019 so it has probably matured a bit and no doubt has a bit of mould on it !!
Most of what you will read below these opening paragraphs was written back then - so don’t get too hung up on the timeline if I talk about events which don’t make a lot of sense. It has just struck me that back when I wrote this draft we hadn’t even heard of Covid 19 !! I hope you find it a decent and worthwhile read, Cheers, WD.
Big THANKS to regular Reader Jim (that’ll be the prunes, mate) who gave me the idea for this Blog during an email discussion we were having. In essence we were discussing how I go about timing my Buy Trades (please note, this Blog doesn’t really address Sell Trades although at the nub of it they will be partly the opposite in practice), and it struck me that this was a great subject for me to drone on about and that many Readers might find it helpful (especially if insomnia is your particular affliction).
Breaking with my recent lazy tradition of just ripping into my Blogs and hitting the keyboard from a blank sheet of Microsoft Word, I have actually done a Plan for this one and as a consequence you might notice a little more structure. This is exemplified by me having a section that talks about the Principles behind my Buys and then a section that goes into the Practice of actually doing it. |
'Educational' WheelieBlogsWelcome to my Educational Blog Page - I have another 'Stocks & Markets' Blog Page which you can access via a Button on the top of the Homepage. Archives
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