It’s a Saturday Night and needless to say there is nothing bearable to watch on TV, so I thought I could spend an hour or so creating a Draft of a new Blog Idea I have had kicking around for a while. As it played out, I looked through my list of possible Blogs to make a start on and nothing was really leaping out at me although I remembered an idea I had recently to do one about the importance of being Patient - and because it is something I profoundly think could help many Readers hugely I decided it would be quite an ‘exciting’ thing to write (that gives you an idea of how dull the garbage on the TV tonight is !!).
I am bemoaning the TV there but in truth I must just sing the praises of that ‘James May’s Toy Stories’ series which was first shown on the Beeb perhaps 3 years ago or around that but it has been recently repeated on something like the Discovery Channel and tonight while I was troffing my Curry they had the one where his team of genius Engineers (basically a chap called ‘Simmy’ really) build a Motorbike and Sidecar out of Meccano and then attempt to ‘race’ it around the Isle of Man TT course (I say “race”, but in truth it only does something like 7 mph). This is all relevant because the ‘Skill’ of Patience is written all over this utterly insane challenge and obviously applies to the painstaking and presumably utterly tedious task of creating the Bike out of thousands of tiny pieces of Meccano and their associated tiny Nuts & Bolts and Washers and stuff but also because so much of it had to be machined to make items like a Final Drive Chain and an incredibly complex Wheel (well, 3 of them in fact).
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Guest Blog from Justin Scarborough - Finance for Non-Finance People - Part 2 Company Valuation13/6/2018
This is the Second Part of an excellent Article on Accounting Basics produced by Justin (@justinscarboro2 ) and kindly offered for sharing on my Website. If you have not read Part 1 you can find it here:
http://wheeliedealer.weebly.com/blog/guest-blog-from-justin-scarborough-finance-for-non-finance-people-part-1-the-basics Oh, and while I think about it Part 1 had some excellent Reference Material in it so I have created a new Blog Category called ‘Accounting’ so if you click on that you should be able to find it quite fast in the future. This Second Bit covers Company Valuations in the main and I did some Blogs myself on this subject quite a while ago now and you can find those here: http://wheeliedealer.weebly.com/blog/valuation-valuation-valuation-bursting-for-a-pe-part-4-of-4 There are Links at the bottom of that one to the earlier 3 parts. Cheers, WD (P.S. - Thanks Justin, the feedback I have had from WD Readers has been really glowing on Part 1 and I expect we will get more such applause for this bit - Pete).
I figured that title would attract a huge Readership to this Blog - I nearly went with ‘Free Bitcoins’ as I thought that would drive devourers of Reading Material on the Web utterly insane with their frenzy to take advantage of such an appealing offer.
I nearly went with something along the lines of ‘Actresses and Bishops’ because that tends to draw a big Readership also but I didn’t think I could stretch what seems to be the dull subject of Dividends that far. I also know that a small chunk of Readers are under 18 so I need to keep it clean (ish). I have actually stolen the title from my mate Cappy (@SmallCappy on Twitter) who always comes up with this term when we mention the wonderful phenomenon of nature that is the humble Dividend Payment. He has nailed it with such a description and I am fully onboard with his use of this term and I shamelessly pinch it whenever I can (you should have copyrighted it when you had the chance, mate !!).
My mate David from Blackthorn Focus is holding an Investor Event on Tuesday 26th June in Cambridge which you can see details of below and I asked him if he could knock up some words on each of the Companies as they look quite interesting. He has done exactly this and I have added some thoughts underneath.
I have also repeated the bit about the Duxford Aerodrome Event on the day before - Monday 25th June - everyone is invited and it will be a fun day out I am sure. Full disclosure, I am taking no commission or anything from David. He is a mate and we regularly chat about Stocks (he is an excellent Investor) and I am merely helping get the word around about the Event he is organising. It is up to Readers if they want to go or not and it could be a decent chance to talk to the Directors of some interesting quality companies. Cheers, WD.
I don’t envisage this being a particularly long blog - it is a simple point really so a few paragraphs should cover it. I often see and hear the comment “Don’t buy Tips” and I was thinking about this the other day and came to the view that it is a lot more nuanced than that simple phrase allows for.
The first thought I had was that everything gets Tipped somewhere - i.e. in Investors Chronicle or Shares Magazine, or Mail on Sunday, or Techinvest, or Small Company Sharewatch, or Red Hot Penny Garbage, or Questor in the Telegraph or in the Times or whatever - there are countless sources of ‘Tips’. On this basis, if you were to apply the “Don’t buy Tips” ‘rule‘, then you wouldn’t really be able to buy anything and your Investing Universe would be extremely tiny !!
This first paragraph is being written after all the rest in this Part of the Blog Series. Having now completed a very good Draft of it, I have decided that it is extremely involved and lengthy and for this reason I will separate the Examples out into its own Part - Part 3 - and now the Blog Series will run to 4 Parts with the final one being a Conclusion that brings everything together.
Finally I have got around to starting on these Examples - I have been struggling with precisely how to do it as I had a few ideas in my head but often that is not actually helpful and it merely meant that this state of indecision was simply stopping me getting on and writing the darned thing !! Anyway, I have sort of settled on the basic way of doing it and I am starting typing and shoving in pictures in the possibly forlorn hope that it will sort of coalesce into something that makes sense.
This is the Final Part of a Series of Blogs - if this is the first time you have been unlucky enough to find this Series then Links to the earlier Parts are at the bottom of this one if you scroll down.
Conclusion I am hoping that I have done these Blogs in a way which Readers can makes sense of and will enable them to think about how to go about such Index Trading themselves if the urge takes hold. You can use ETFs like XUKS (a way of Shorting the FTSE100 that you buy and sell like a Share. To go Long on the FTSE100 you could use something like ISF I think - you will need to check this) instead of Spreadbets and of course things like CFDs will give a similar result (but these come with Tax disadvantages when compared to Spreadbets). But it goes without saying (but I will say it anyway !!) if you do fancy having a go you must be extremely careful and start with a Practice Account perhaps or at least start with very low Position Sizes - don’t go betting £1000 a Point on the FTSE100 on your first Trade !! (that would be equivalent to about £7.2m of Exposure by the way !!!). Before I finish the Blog Series off, I just want to stress the following Key Points:
This is the Second Part in what should be 3 chunks regarding what is a pretty complicated and hefty subject - before getting stuck into this, I would strongly suggest reading Part 1 which you can find here:
http://wheeliedealer.weebly.com/blog/wheelies-new-improved-index-trading-system-part-1-of-3 Trade Types I am particularly looking for As with all things in Trading and Investing it is extremely important to strive for simplicity and in line with this I essentially have 4 different ‘Types’ of Trade Setups that I am particularly after; and they can be grouped into 2 different types - Long and Short. In the Final Part of this Blog Series I intend to produce some Examples using real Charts of these types of Trades so Readers can get a much better appreciation of what I am going on about.
Anyone who has read some of my Blogs and Tweets and followed what I get up to with my Trades cannot have missed my obsession with trying to Hedge my Long Portfolio of Stocks using Short Spreadbet Positions on Major Indexes.
This is all about trying to lower Downside Risk - in essence there are 2 types of such Risk - ‘Stock specific’ which can be diversified away by holding a number of Positions and by such things as Sizing to Volatility, diversity of Strategies, diversity of Sectors, diversity of Stock Types (Income, Defensive, Growth, Value, etc.). The other Risk is ‘Market specific’ - this can only be practically reduced or largely mitigated by the use of Index Shorts - which is what this Blog is about.
This is the Final Bit of a Series of Blogs on this Subject which have been very highly praised (up until this one anyway which might be a total let-down) and if you have not read the others there are links to them here:
http://wheeliedealer.weebly.com/blog/evolution-of-an-investor-part-1-of-4 http://wheeliedealer.weebly.com/blog/evolution-of-an-investor-part-2-of-4 http://wheeliedealer.weebly.com/blog/evolution-of-an-investor-part-3-of-5 http://wheeliedealer.weebly.com/blog/evolution-of-an-investor-part-4-of-5 Stage 6 - 2018 Onwards - Where next? I can only write this Section with the thinking I currently have with regards to how my future Learning is going to pan out and to focus on the elements that I am putting my efforts into as we speak or things that I have made a conscious decision to address in the near future. As Readers may have realised from what I have written so far in this Blog Series, there have been several times in my Investing Career where I have flatlined or been unable to instantly find a new direction - but as things turned out something always came up and re-invigorated my motivation and drive to keep on Learning and, more importantly, improving. With what I have just written in mind, here is my current thinking on where my Learning Efforts are going to be focused in coming years, but I am sure the reality will diverge from this somewhat: |
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