A continuing mantra you will hear and read from me is around the value that talking to other experienced Private Investors and Traders can provide. In addition, I find this is widely under-appreciated and it is probably the biggest source of Learning that I undertake these days. Indeed, undertaking the TPI Podcasts venture and being able to discuss countless aspects of Investing with someone as talented and successful as @Conkers3 is a huge help to my thinking with regards to how I go about things.
This can be on different levels - probably the main focus for me is to hear the techniques and methods other Investors use and these discussions bring ideas for potential ways in which I can tweak how I go about things in order to improve my Results. On another level, and probably of less interest to me, are the views of other Investors with regards to which Stocks they are invested in and what their take on certain Stocks is. Of course this can be hugely dangerous because it is immensely ‘Noisy’ Information and I won’t just listen to any old Tom, Dick or Fred and there are only a limited group of Investors who I do take notice of on particular Stocks and I perk my Ears up when they give an opinion. Screening out less useful opinions is of course difficult and it is only over time with experience that you can find out who is worth listening to and who just adds to your Noise levels - yet again a situation where there are few alternatives (if any) to actually going through the motions and doing your ‘time’ in the Markets.
0 Comments
I hope you have enjoyed the festive period with your families and taken the time off to relax. Due to the pressures the stock market puts on us, and certainly if you’re an investor, it can add stress to our lives as global equities take a tumble.
That said, next year is another year. Another year to build on the lessons of 2018, improving our strategies and refining our stock selection processes. The beauty of compounding is that both money and knowledge compound and so every year we have a bigger advantage than the year before. Extreme volatility often signifies a potential peak. We saw this in February, with the Dow plunging, only to recover and make new highs. However, there can be no doubt over the past few months that we are in rocky waters. The last week has been nothing short of a rout. I don’t believe that anybody can predict a recession (I’m certainly not clever enough to) and think that the only people who claim they can are either 1) lying, or 2) selling something - but managing risk is something that we can all do. We have had a brilliant bull market for the past decade – whilst nobody knows the top we can say with absolute certainty we are always one day closer to it. Headwinds such as interest rates and Brexit may not be resolved for a while, and though there is always something to be scared of, we are seeing significant changes in price action. Being prepared is the best defence.
It really seems like just a few months ago that I was writing my Xmas Message for 2017 - there is that old saying that time gets faster the older you get and it is hard to dispute this on the evidence of 2018 which has simply shot by. However, the fact it has gone by fast is arguably a good thing and I would probably lean that way because apart from a few bright spots 2018 has been a pretty rubbish year for me and I can only hope that 2019 is much better - it could barely be worse (oh no, that really is tempting fate….).
We all know the Stockmarket has been an utter pig this year but I have also had a pretty tough year on the personal front with the worst bit by far being the sad departing of my Mum which you may have seen me mention on Twitter. I had flagged for a while that she was in a bad way following a stroke but she finally succumbed about a week ago and to honest it is very much a relief as she was clearly not going to get better and at best she would have ended up with an extremely poor quality of life and being stuck in a nursing home requiring intense levels of care. In addition it would put immense pressure on my brother who bears the brunt of such things as he is much nearer than myself and of course my physical condition limits a lot what I can do. The funeral is in early January and I have to note the irony of how my parents both managed to make their presence felt over the Xmas and New Year periods by their absence (my father died 2 years ago at pretty much precisely the same time of the year).
Allowing for Timing Issues
From those Examples I put in Part 3 of this Blog Series regarding different % Sizes of a Drop (if you look on the Educational Blogs page you should be able to easily find Part 3 if you have not seen it yet), it appears a bit of a ‘No-Brainer’ that if our Portfolio is above a certain Size, then we should seriously consider a ‘Move into Cash’ when we anticipate a Drop in the Markets coming. In other words, as an example, if your Portfolio is worth £50k and you expect a Drop of 10%, the Costs of moving half your Portfolio into Cash (assuming a 2% Spread) would be 6.8% so it probably would not be worth the bother (go back to Part 1 of this Blog Series to get more information about this). But of course nothing is this simple.
Moving into Cash - the Unknowable and Uncontrollable bits
In Part 2 of this Blog Series I wrote about what kinds of things are ’Controllable and Knowable’ when it comes to Moving into Cash but the ‘Uncontrollable’ and ‘Unknowable’ aspects of Moving into Cash are many and by definition impossible to be certain about in advance. The kinds of things that are Uncontrollable and Unknowable include factors like the following:
If you have not read Part 1 of this Series, then scroll down the ‘Educational Blogs’ page and it should appear a couple of Blogs before this one. I recommend you read that first.
Moving into Cash So now that I have ‘set the scene’ with these Concepts of Controllable stuff and Uncontrollable stuff and, likewise, things we can be Certain about and things where we have no Certainty; I want to relate them to the specific Subject of ‘Moving into Cash’ but of course these concepts have wide validity across many aspects of Investing as I pointed out in Part 1. To be clear on this, I am discussing the subject of whether or not we should sell All or Part of our Portfolios before we foresee a Major Drop in the Markets coming - a bit like we have had this Year with the upcoming Brexit escape from the EU. I am not really sure how to go about writing this and as much as I know I should plan out a structure, I am not really in the mood for that so I will just crack on with it and of course vigorous use of the ‘Cut ‘N’ Paste’ function should help me sort the resulting mess into something that is almost readable. (Editor’s Note from much later - not doing an Initial Plan was a very big mistake !!)
There have been a lot of discussions on the Tweets lately around the idea of ‘Moving into Cash’ when it appears that the Markets are facing what could be a fairly sizeable drop and I wanted to discuss some of the many issues around this and some related stuff. At the time of starting to scribble this we are in the depths of Autumn 2018 which has brought some seriously major Falls in the Markets and the Brexit Talks are in full swing and going terribly - hopefully by the time you are reading this we will have more certainty on the Talks but it wouldn’t surprise me too much if the Parties involved on both the UK and EU sides are still dicking about.
How true the Paragraph above has turned out to be - I am now typing this Paragraph at the end of November and the whole Brexit thing seems to have got even worse with T May seeming to have lost touch with reality and trying to force through some sort of ridiculous ‘Deal’ where we have given away everything and £39bn for absolutely nothing in return. Unreal.
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.
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
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: |
'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
January 2021
Categories
All
Please see the Full Range of Book Ideas in Wheelie's Bookshop.
|