HUMBUG (2)

INVESTING FOR A RICH RETIREMENT

HUMBUG’S INVESTMENT DIARY 3rd AUGUST 2018

FEATURE POINTS

 Naughty, I broke my rule about taking profits/stopping losses, seem to have got away with it, best I don’t do it again.

 It’s not been a fun week, my GBTO portfolio is down £2062.

 Only one trade for the coming week. Selling Japan for a loss of circa £210.

 Portfolio up 5.9% since the start of the 2nd year of the GBTO.

WHY HAVE WE GOT A PICTURE OF A SLEEPING CAT AS THE HEADING FOR THIS WEEK’S REPORT?

Simple, firstly I like cats and thought the picture was kinda cute. Second, I’ve only got one selling order to place with my brokers, other than that there’s nothing for me to do to the Great British Trade Off portfolio this coming week.

So I plan lots of siestas to get me through the very hot weather that’s forecast.

As you know Fagin and I are trying to use the stock market to build as much wealth for our old age as possible. We’re each seeking to build a rich financial independence for ourselves over time,  but are coming at it from different angles.

We wanted to see which was the more effective way of making money, was it INVESTING or was it TRADING. We decided the best way to find out was to each put up £100k and do it for real.

Which is what we did. The Great British Trade Off is the competition between us where I’ve got my money invested in the markets (albeit quite aggressively placed) and Fagin trades his, looking to pick the markets pocket time and time again.

The competition runs over the financial year, April to April. last year 2017/18 Fagin slaughtered me, no other way to describe it.

This year however is different. We were level pegging last week (week 12) both up 8% since the start of the second year.

An 8% gain in 12 weeks from both investing and from trading. Hum, beats putting your money in the local bank (if you can find one that hasn’t been closed) does it not? Albeit there is more risk with what we’re doing.

To demonstrate the point about more risk, my figures this week do not make a happy bedtime story. Just look at how steep the decline in my running profits was last Monday and Tuesday.

Let’s start this week’s report by looking back. Last week I reported that my tiny position in the Marlborough UK Micro-Cap Growth Fund had crashed and burnt. I was supposed to sell and take a circa £27 profit out of my £1k holding.

It had gone down through my ‘take profit/stop loss’ which is a six week moving average but immediately bounced straight back up.

So I didn’t place the selling order. Naughty huh.  I’m not supposed to do this sort of thing, the system is the system. This time it’s worked out OK so far and the monies involved are tiny…………………………………….but if I start making a habit of this I’ll cock the whole thing up. So best I don’t.

This week has not been a fun week to be honest. Corrections are a very necessary part of market activity and have a tendency to be rather steeper than the preceding gain, although hopefully only retracing (say) two thirds of the gain. This weeks correction has wiped £2062 off my profits for this current year and has been quite savage.

The question is, does today’s worldwide market rally mark the pivot point or will the decline continue next week? I have no idea, the charts I base all my investment decisions on follow the action, they don’t lead it.

All of the eleven funds I currently hold are down this week, all bar one are in safe territory, but the Legg Mason IF Japan Equity Fund is down a fraction below the six week moving average.

So it has to go. Shame,  I only bought back in three weeks ago, but as you can see the chart has changed. The strong uptrend from this time last year has been replaced by a fairly volatile sideways movement since March. It’s now failed three times to break out through 390p.

I bought in in the expectation that it would break out convincingly, it didn’t, so its game over as the stop has been hit.

My likely loss is circa £210 on a £5k position. All part of that ‘game’, last time I sold out of this fund I made £650.

The Japanese market in general and this fund in particular, have a lot going for them, I’ll bet my life, sometime in the future I’ll be buying in again.

That’s it for this week, going forward into next week, nothing to buy and just this one sale.

 

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