This probably won’t be a particularly long Blog but I just wanted to scribble something about how my ‘Style’ or ‘Approach’ so far in 2018 (and with barely 2 Months left it ain’t gonna change much - although of course I might stick with the Current Style for a while yet as we go into 2019), has been markedly different from how I usually do things.
In most ‘Normal’ times I tend to focus on picking Stocks and I sort of relax in the fairly certain belief that more often than not the Stockmarkets are going to rise (after all, this is by far their usual way of doing things with Bull Markets vastly outnumbering Bear Markets) and perhaps I switch to more of an Index or Market focus when we get towards Autumn or if other one-off Events like a General Election or something mean that there is likely to be a Short Period of pain ahead which will need me to Hedge by focusing on the Indexes and using Spreadbet Shorts to try to offset some of the damage that my Long Portfolio is likely to suffer and soon after the ‘Problem’ I normally find that Markets and my Portfolio recover quite promptly.
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This is the third of the Buy Checklists I am creating and once I have Published the final one I will put Links in it to all the others. This one is for Stocks that have fallen foul of the Markets usually after a Profit Warning or several and although Buying such stuff can be Risky it is often a very good strategy for making sizeable Returns and I regularly find that for Quality Stocks that have real decent Businesses underpinning them, they nearly always recover after an often lengthy period in ‘Rehab’. This can apply to Stocks I already hold that have gone a bit messy or for Stocks that are new to my Portfolio.
So far I have published Checklists for these kinds of Stocks and you should be able to locate them fairly easily on the ’Educational Blogs’ Page as they are from recent Weeks and the final one will be for a ‘Quality at a fair Price’ Buffett Stock:
My mate Michael (@vilage_idoit on the Tweets) has done me a huge favour and offered up this great piece of writing to help me out at a time when I am struggling to produce Blogs for the Website because of my ever dragging on Health aggravation. It is very relevant to the current unpleasant Markets we are all suffering and well worth reading.
Big THANKS mate, WD
I often get asked how I managed to accumulate enough Capital so that I could retire at the ripe old age of 44. OK, it is time to come clean about one of my Dirty Little Secrets - I am one of the UK’s most prolific National Lottery Winners !!
Obviously I am far too modest to talk about this much and it is no big deal because I have never won the Top Prize or anything but I have a ‘system’ by which I regularly make small Wins which of course add up to a large amount over time.
I recently published a Blog with a Buy Checklist for Stocks for my Income Portfolio and now I’m turning my attention to my ‘Normal’ Portfolio.
I realised that just one Checklist for the ‘WD40’ would not actually suit my needs because I Invest in a range of Investment ‘Styles’ to ensure more Diversification. On this basis, I have decided to produce the following Checklists:
As I start to produce these I will probably realise that I need more but I really hope this doesn’t happen as it will just confuse things and make it all too complicated.
Lots of People on Twitter etc. are extremely helpful with Tweeting out Stocks they have been buying and selling - which can be great for drawing attention to New Ideas of Stocks to Invest in and also lets People reading the Tweets get an idea of the sort of Approach a particular Tweeter follows. I always say that I can get a very good insight on whether or not a particular person makes Money simply by looking at the Stocks they Tweet about. This really is one of the many benefits I find from being extremely fortunate to be able to interact with so many helpful and collaborative Investors / Traders and it has enabled me to meet a whole new bunch of top quality Mates - and this has without doubt boosted my own never-ending Learning Process.
I am sure I mentioned that I wanted to create ‘Buy Checklists’ that I could use to help me make a final Decision whether to Buy a Stock or not and having thought about it I have come to the conclusion it is not an easy thing to do !!
I have sort of already done the opposite of this - a ‘Negative’ if you like in a photographic sense - in the form of the ‘WheelieBin’ and if you look at the Website page with the WheelieBin on it you will find a good Checklist of what constitutes a Stock that is best avoided.
This Video was doing the rounds on Twitter recently and is merely 7.5 minutes long but in that time the wisdom that Warren Buff puts out is pretty remarkable:
https://www.youtube.com/watch?v=T6HHwOoq9M4 I have watched this a few times (I recommend Readers do likewise) and many of the usual lines Warren trots out are repeated here but they are without doubt bang on the money and if we take these principles on board then that is going to put us in good stead. The following points from this remarkably short Interview stand out to me:
This is something I often seem to discuss with People and to Tweet about but I am not sure if I have ever written much about it in my Blogs. Anyway, the point I am making here is that when calculating the Performance of your Portfolio or of the Stocks within it, it is always a good idea to think in terms of Percentages - not in terms of the Pound Notes.
There are many reasons for this but the main one is that once your Portfolio gets to a particular Size (and this will vary depending on each and everyone of us and our attitudes/personalities especially with regard to Risk and of course how ‘Rich‘ we are in total), if you start to think in Pound Note terms then you can easily frighten yourself and this will lead to Fear, Panic, and other Cognitive Errors that the amount your Portfolio moves about is instilling in you.
This is the Second Part in a Blog Series of just the pair, and you can read Part 1 here:
http://wheeliedealer.weebly.com/blog/the-diminishing-problem-part-1-of-2 Averaging Down and what it means for The Diminishing Problem As we have established, when you have a Stock in your Portfolio which is going ‘wrong’ and the Share Price is on the slide, it is a ‘Diminishing Problem’ in that as it drops the impact on your Overall Portfolio reduces. Now the opposite effect is in play when you have a Good Stock which is going up - as it grows in Relative Size as a Proportion of your Portfolio, then the Positive Impact increases over time. These combined effects are extremely useful and another of the rare ‘Free Lunches’ that the Stockmarket gives us. |
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