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educational blogs |
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I was contacted recently by a chap called Donncha via Twitter ‘X’ (@dsmarron) and I have had a couple of phone conversations with him and lots of text communications. He’s a decent bloke and reached out to me for help with an idea he had for a Research Project, around how private investors get into investing and the methods they use etc. After my introductory text, I have included some words Donncha sent me which is a decent summary of what is involved.
This is not a huge survey type piece of research, but Donncha (pronounced ‘Donica’) would like to interview around 30 individuals and I know he has conducted some interviews already (I myself am due to be interviewed as well). These can be done face to face or over Zoom or something, depending upon what suits the people involved. If you would like to help out on this project, then contact Donncha on the email address right at the bottom below and he will send you a ‘Participant Information Sheet & Consent Form’ which he needs to get agreement to as part of the formal University of Dundee process. The output report of the project will be published in various places, and if you take part in the exercise, then Donncha is very happy to send you a copy of the report; and I suspect it will be very interesting. Please help out if you can, don't worry about your experience level or investing/trading style - it would be ideal from what I understand if there is a mix of methods, skills, experience, background etc. etc. Regards Pete The Project My name is Donncha Marron and I’m a lecturer in sociology at Abertay University in Dundee, Scotland. I have a research interest in personal finance and I am currently developing a project that examines the perceptions and experiences of private investors in the UK. In contrast to conventional economic or behavioural finance approaches, the aims of the project are to understand the social contexts and cultural processes that shape investing as a meaningful practice. Once completed, the findings of this project will, hopefully, be disseminated through academic conference presentations, peer-reviewed journal articles, and broader media engagement. Research Participants To address the aims of the project, I am recruiting a number of engaged private investors, stock pickers like you, to participate in one-on-one, semi-structured interviews. Each interview will be conducted online by me in Microsoft Teams or Zoom, last 60-90 minutes, and will be recorded and transcribed. If you take part, the interview will be organized as a free-flowing, non-directed conversation organized around key topic areas including: 1. When and where you started out as a private investor and why you developed an interest in financial markets. 2. How you review, buy and sell particular company shares and what judgements, both financial and non-financial, you bring to bear in doing so. 3. What you think, feel and do when you monitor your portfolio, including attending and voting at company AGMs. 4. How you work upon and reflect upon yourself, and your development over time, as an investor. 5. What you think about financial markets, financial services, and the macroeconomy more broadly, including the role of the private investor within these. Ethical Approval This project has received ethical approval from the Research Ethics Committee of the School of Business, Law and Social Sciences at Abertay University (Taking stock: a sociology of private investing, Project Ref: EMS7525). Any information you provide will be treated in strictest confidence and you will not personally be identifiable, in any way, when the findings are disseminated. You have the right to withdraw participation at any time, without giving explanation. All data generated from the project will be held securely on a dedicated University data server in accordance with Abertay University’s GDPR protocols. More Information If you are interested in taking part, or would like further information, please email me at [email protected]
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This text was previously abridged and published in a much smaller version on the SharePad educational articles pages. Here is the full version and includes much more detail. If you are interested in using SharePad or ShareScope yourself, then you can click any one of the various Advertising Banners around my websites and you will get one month of data for free, and I myself get a payment from Ionic Information for introducing you (many thanks !!). You can also simply use the Promotional Code 'wheelie' when signing up for either of the products. 1. Social handle/SharePad chat name / Name? @Wheeliedealer 2. How long have you been investing? Around 24 years. 3. How long have you been a SharePad subscriber? I was previously subscribed to ShareScope and must have used that for about 16 years or more. I have been using SharePad for roughly 4 years. I switched to SharePad because of the benefits of being able to access via any device (Laptop, Tablet, Fone); no requirement to update database on my laptop; and because the presentation of fundamental information for my requirements is superior. ShareScope wins on Technical Analysis (Charting) capabilities, but SharePad has the technical tools I need and use daily. 4. How regularly do you use SharePad? SharePad is an essential part of my daily routine and I probably use it for at least 2 hours a day; and I tend to dip in and out of it through the day. 5. What is your typical SharePad routine? I wake up at 8am (I used to wake up much earlier, but I realised it made no real difference to my investment approach and I value the extra time asleep, because sleep is essential in this game !!) and take a first look at the moves on my portfolio of stocks at 8.20am on SharePad – this gives time for the market to settle down from the initial gyrations and distortions of the opening period. Traders like all that action first thing, but as a Long Term Investor, I can do without the noise !! On my first look at my stocks I am just getting a sense of what moves are happening, and the first bit I look at is the indexes – particularly the FTSE100 and German DAX; I have a Spreadbet ‘system’ (the GIT Geared Index Tracker) that is based on the FTSE100 this year so it is important I keep abreast of what is going on there. I am particularly looking for anything out of the ordinary and extreme; this could be a sizeable fall (which usually means I have a Profit Warning to get upset about !!) or perhaps a decent rise (which means a good Trading Statement has come out, or a Takeover Bid sometimes – but, sadly, not often enough). I then move on to the News items for my Stocks and I use SharePad for this on my 7 inch Tablet. I am sitting up in bed when I do this, with the duvet up around me keeping me nice and toasty. I am quite active on Twitter (ok, ‘X’ or whatever daft name it has these days) and I tend to tweet out any news of relevance regarding my stocks and perhaps some information regarding valuation etc, which I get from the SharePad ‘List’ screen which I have setup for things like p/e ratio, fwd p/e ratio, 2 year fwd p/e ratio, dividend yield, fwd dividend yield, 2 year fwd dividend yield, ROCE, fwd ROCE, Market Cap, etc. etc. My approach is very much a mix of fundamentals and charting; so I am constantly looking at chart patterns and candlestick patterns as part of my routine. I next move on to the general News for the day on SharePad. The filtering functions are very useful here because a lot of the daily RNS announcements are pretty useless and irrelevant for a Long-Term Investor; stuff like Net Asset Value (useful for some types of stocks), Blocklisting Announcements, Form 8.5 announcements during a takeover bid, etc. I tend to start with the most recent news item and work backwards; I am only interested in what I deem to be ‘quality’ companies and I ignore announcements from the vast majority of AIM Garbage (loss making, no hope, jam tomorrow, story stocks) and most AIM Miners (unless I specifically am on the lookout for a miner – but that is rare). I read the announcements and if I think it is relevant, then I tweet out a very brief summary of the news item and I often include some information regarding the valuation (fwd p/es, fwd divvy etc.) and I give a clear view on whether or not I think this is worth buying or perhaps holding, or if it is best left alone. I look at the chart on SharePad as well, and I often comment on how the chart is looking and what the major trends are. Sometimes I will move to the ‘Financials’ tab and look at things like the Income section (Profit & Loss account), the balance sheet bit and the historic dividends etc. I usually do this process of working through the news on quality stocks until about 10am when I have usually got through all or most of the news items, and I am more often than not getting bored and I need a cup of tea !! The reason I work through the news items like this is because I want to be up to speed on how the quality stocks are doing and because I am on the look out for ones that particularly impress me and that could become holdings in my own portfolios. At the time of writing this in October 2023, I am trying to reduce the number of stocks I hold and I am in a gradual process of getting the number down; so I am not that actively looking for any new stocks to buy. However, I am nearly at my target number (WD30) and once that happens, it will be a ‘one in, one out’ discipline that I will be employing. I am also suffering from ropey health and as a result I am not as dynamic with my portfolio as perhaps I could (and should) be. I then at last get up out of bed and I do stuff like eating etc., but then I have a hefty daily routine of sorting my life out. I am paraplegic (I am paralysed from chest level and I use a wheelchair) and this comes with lots of joys like the simple fact that everything takes several times longer to do than for able-bodied people. For example, just getting dressed can take about 15 minutes and is quite a physical and active task. These daily demands and stuff like going shopping and suchlike, take up much of my time during the middle of the day and for the afternoon. So I don’t really do much with my stocks until about 6.30pm, when I have had my evening meal and I want to see how my Portfolios have performed on the day. Between 10am and this 6.30pm daily reckoning, I am regularly looking at how my stocks are doing and at particular chart patterns and suchlike on my stocks and on the major indexes. The US Markets open around 2.30pm UK time and I don’t tend to look at them until about 3pm (again this gives time for the gyrations of the open to settle down). Quite often I am out at Aldi, Tesco or Asda and I don’t look at my stocks at all (unless I am in McDonalds and waiting for them to bring my Big Mac &Fries to my table and I can’t help getting out my fone to see what is happening !!). At about 6.30pm I login to my Share Accounts and my Spreadbet Account and I take the valuations and then work out how I have done on the day. I tweet this out along with a list of significant moves that have happened on my portfolios. As part of this exercise, I am looking at the Charts on SharePad and getting my head around the major trends and the moves inside these trends etc., to get a good sense of where my stocks are at. Sometimes I will be planning to topslice or completely sell a position or I might be looking to buy more of a stock I already have; this exercise of looking through the charts helps me with my timing regarding such possible trades. I never rush any trading decisions – quite often I am weeks ahead of a sell or a buy trade and I am ‘stalking’ a good time to actually do the trade. This ‘daily reckoning’ task takes about 30 minutes and then I ignore the markets and probably watch some TV or something, until just after 9pm when I power up my laptop (most of the stuff up to now I do on my 10 inch tablet apart from the news look-through first thing which is done on my 7 inch tablet) and the focus now is purely on the Index Charts and I also look at Brent Crude Oil and Natural Gas Composite Nymex in the US – I have a fair few Oil/Gas stocks and this is useful. I tweet out what I am seeing on the Major Indexes, in terms of daily candles, RSI, MACD, 13/21 day EMAs, 8/21 day EMAs, Resistance and Support, Bollinger Bands etc. That’s pretty much it for the day then. Over the weekends, either on a Saturday evening or Sunday evening, I will look at the index charts and tweet out what I am seeing; in a similar way to what I do during the week. When I have a spare slot in my Portfolio, I will use a lot more SharePad features to help me narrow down and thoroughly investigate a potential candidate for me to purchase. Most often I already have an idea of perhaps a particular stock (in which case it is simply a case of confirming I am confident in the choice), or it can be that I have 2 or 3 potential candidates and I am looking into each of them to narrow down which one really stands out as the one to put more research effort into, and ultimately to buy unless something puts me off. As part of this ‘hunting for a new stock’ process I use a lot more SharePad features. In particular, I use the ‘News’ feed for the particular stock a lot and look back through the archive and read what I see as the most relevant/important items (Results announcements, Trading statements, Director deals, new products etc. etc.) I also like to look through the Phil Oakley charts and see if these throw up anything I should be aware of and which could be concerning; or perhaps it shows up something that is better than I understood up to that point. I also look at the Balance Sheet and Income bits under the ‘Financials’ tab to ensure debt is ok and things like that. Another really helpful part is the ‘Directors Deals’ tab which can highlight significant holdings and where Directors don’t have much ‘skin in the game’. I also run an Income Portfolio which is comprised of 15 Stocks and I am looking for a blended Dividend return of about 5% across the portfolio. When a slot appears in this collection, I often use the SharePad ‘Filter’ functions to search for stocks with high dividend yields or I might just grab the ‘FTSE350’ on the ‘List’ page and then sort them in order of Dividend Yield – this is a quick way of highlighting potential new buys. Another feature I find useful when hunting a Dividend stock is to use the ability to compare Charts on the charting bit. For example, if I have narrowed down the choice to 2 or 3 stocks, then I can do long-term charts of them and overlay each one; this enables me to easily see the stock that has performed the best over many years, and it helps to pinpoint which stock is probably the best for me to go for. Over the weekend I might also review a stock I already hold and that I might be thinking of selling or buying more of. This is similar to the approach I use for looking at new stocks. However, when I hold a stock this is all part of an ongoing process that happens everyday when I am adding to my understanding and knowledge of the stock/business I hold. Much of this understanding sort of happens by osmosis on an incremental basis. I don’t use all that many features of SharePad really. One of the beauties of this tool and of ShareScope is that they offer so many chunks of information and the ability to customise is considerable. I know many people who use the full functionality and they record all of their portfolio details within the system; it is clear to me that this has huge benefits and can help with tax returns etc. I don’t use those features myself mainly because I have my own methods of recording such details and I am quite set in my ways (you can’t teach an old hound new tricks !!). Perhaps the best bit about SharePad for me is how I can rely on it to be my daily ‘workbench’ and on the reliability and accuracy of the data. In truth, much of the data/information can be found for free on various websites, but it takes a lot of time and a lot of faffing about, whereas with SharePad the information is all there in one place and it saves me an immense amount of time and effort. The time saved in terms of tracking down the required information is time that can be used for superior research or simply to reduce the overall time you spend on investing, and you can get on and do other things with your life. This is particularly important if you have the demands of a family and/or heavy work commitments etc. In terms of negatives there aren’t many that I have found. The charting capabilities of SharePad are not as good as on ShareScope, but the advantages of being online and having better fundamental information, more than make up for that shortcoming. I must admit I do get irritated when SharePad change something on a version upgrade, and then I have to faff around for a while trying to get things as I like them; but thankfully this is rare and there is nearly always a way to customize the screens to get them as I want. If I cannot solve a problem, I have mates who use SharePad who I can ask and the Support team is very prompt and helpful. Something else that isn’t great is when using SharePad on a Mobile Fone. I haven’t done this very often because when I am at home I tend to use one of my tablets or my laptop. As you can imagine, when used on a Mobile Fone (even one with a large screen), the information is still shown in quite a small format, and with my ancient eyes, it is far from ideal !!! Other than those few drawbacks, it really is an essential and time-saving tool that I rely on every day.
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.
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 !! |
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