THE GREAT BRITISH TRADE OFF
NOT A LOT HAPPENING
This posting is not investment advice in any way shape or form. Its simply a record of our investments, trades and views. Please do not copy anything we do or have done, always do your own research.
Friday June 22nd 2018. We’re both totally focused on FINANCIAL INDEPENDENCE and one with noughts on. So its vital that we only trade when there’s something we should be doing.
WE NEVER EVER EVER TRADE BECAUSE WE’RE BORED, DOING THAT ISN’T THE ROAD TO FINANCIAL INDEPENDENCE, ITS THE ROAD TO RUIN.
There was not a lot happening for either of us this week. Fagin has not reported any trades and Humbug has made one sale only.
As I reported last week the Neptune Emerging Markets Fund was due to go as it had fallen down through my stop.
It was an £8k position I was holding and it was sold on Monday at 164.75p for a loss of £270. So far it looks to have been the right move as the price has fallen further since I sold.
For what its worth, I actually think the price will dead cat bounce up from around the low sixties (I hate that expression as I like cats) but I trade what I see, not what I think.
CHART OF THE NEPTUNE EMERGING MARKETS FUND
I work in an unusual way, in that my take profit or stop loss position is always in the same place.
I use a six week moving average (the red line) for both actions. If the price since the buying trigger has been strong enough, ie its gone up far enough, then when momentum fades and the line is crossed I sell to lock in a profit.
If on the other hand the price never really got going, as was the case here, then when the line is crossed I sell to stop a loss getting potentially worse.
When you start to bleed, the quicker you can stop it, the less mess there is.
A loss of £270 is a pain, but better than a loss of £2700 which is a real ‘FFS’ to state the obvious.
Emerging markets in general and this fund in particular have been a great story over the last couple of years. The Neptune Emerging Markets Fund at its recent peak was up 80% from the low early in 2016.
LONG TERM CHART OF NEPTUNE EMERGING MARKETS FUND
That would have been a brilliant trend to follow, but as you see the momentum now looks to have faded.
As a side issue, I’ll bet my life that sooner or later the upward trend will resume.
I’m a big fan of charts (especially Sharescope ones). I base all my buying investing and selling decisions on what I see on my screen.
Often I’ve no idea why a price is moving, I can just see that it is moving and that’s all I need to know.
On this occasion I think I do know why the steam is going out of the price. Its all to do with risk and the US.
America is in the process of sharply changing its monetary policy. For years its been printing dollars (QE) to keep interest rates low. The low rates on offer in the US and in the EU as well, meant that investors looking for higher yields took on the greater risk of putting their money in the emerging markets.
That’s now changing, as US rates rise and the Fed also cuts down the money supply, increasingly it doesn’t make sense for investors to stay in the emerging markets not least because those economies will suffer as the dollar strengthens.
So I recon the smart money is now flowing out of the emerging markets and back into the US. If I’m right that explains the chart action.
But as far as my quest for Financial Independence is concerned, frankly I don’t care why this fund has begun to falter, I’ve simply spotted that it has.
To get market beating returns (hopefully) what I need to do is spot when prices have momentum and then buy in, spot when the momentum’s faltering and then get out.
SIMPLE…………………………………….BUT GETTING IT DEAD RIGHT IS NOT EASY.
My numbers for this week are slightly up in spite of taking the £270 hit. Including that loss I’m up £152.
With this sale having gone through, I’m 83% invested, with nothing to either buy or sell this coming week.