Humbug Weekly Report 20th July 2018




HAPPY, HAPPY, HAPPY. The markets giveth and the markets taketh. This week it’s giveth. The volatility we’ve had for the last few months is a big worry to me. I’m looking to build some serious wealth across all my investments, although I only report on the £100k that’s in the Great British Trade Off, and too much volatility is hard to cope with.

Like all of us I guess, I invest because I’m seeking financial independence and the freedom that goes with it. What I like is nice calm steady increases, not wild swings.

But hey we are where we are. Either I sit the market out till everything calms down which I think is too risky in itself, or I continue to invest, looking for momentum but guarding my back with tight money management.

Unless things get totally out of control, it’s going to be the later.

This week my running total is up almost 2%, a gain of £1912.

What’s not to like in that? Apart from the fact that it could just as easily have been down 2% the way things are dancing around their handbag.

In last week’s report (click here to read)  I explained that I’d been whipsawed out of the Legg Mason IF Japan Equity Fund and would be playing musical chairs with myself as it had immediately made a buying signal, so I would be buying back in this week.

The action is all in the green circle, volatility drags the price down through my stop (the red line) I sell to protect profits, locking in a gain of £650. Volatility then sweeps the price back up through my buying trigger (the green line), so in I go again.

I sold a £10k stake but being prudent I only bought £5k going back in. As I write my new investment is down £16 as the price has eased back from the 383.1998p I paid.

Looking ahead, the price needs to break through the resistance (a bit like a ceiling) that has formed at about 390p (the horizontal red line). If it does so convincingly then I think the next leg up to about 410/420p is on the cards.

If on the other hand it fails to breakout, then another whipsaw is very likely. DUH.

I also said last week that I was going to do a sweep round the market to see if there was anything I should buy. Note the operative word, SHOULD. When I first started out trading twenty years ago I bought because I wanted to do something …………………….anything.

That doesn’t work too well I found. The days of buying cos I’m bored are long gone. Making money is better fun than just pressing buying buttons for the sake of it. Calmly thought out trades tend over time to make money. Buying for the sake of it tends to give you an RSI in the wallet.

There were however two funds I felt I should have more exposure to and I didn’t need to look that far as I held them already.

I’d already got £7k invested in the Neptune Global Alpha Fund which was nicely in profit. I added another £3k at 598.2p.

The green arrow marks the spot, this topup trade is up £86 on the week. This is neither here nor there in the grand scheme of things, but it’s a nice emotional boost when you nail a rising price.

I also doubled my holding in the Baillie Gifford Japanese Smaller Companies Fund. Investing another £5k at 5075p. This trade is up £94 on the week.

My buying trigger for a topup is when the price falls through the two week average (the green line) and then rebounds. I have a rule for myself that I never invest more than 10% of the portfolio in any one fund.

These last two investments take both funds up to their holding limit. It’s all about breaking eggs and baskets.

I’m now roughly 69% invested……………………………I wonder what surprises the coming week will produce.