Eadwig
28 Nov 2019
Building A Position Ripley94: I know think i might do a more simple top and slice then yourself . That is basically what I am doing, but I keep track of my buys and sells when I’m focussed on a particular holding that I want to build a long term position in until I have an average I am happy with. So, if I sell a tranche I deduct the profits from the book value of my remaining holding which brings down the holding average of my remaining shares. I do this until I am happy with the average holding price. From then on any sales will be taken as profit - and I mean literally taken and removed from my portfolio… It is difficult to explain because my approach to ‘investing’ is more like a trader’s approach, and a lot of people don’t get it. In simple terms … I have a lump sum invested and have had for 20 years or more. For arguments sake let’s say that is £100,000 At the end of the tax year if the total value of my investments and cash is £110,000 I take out £10,000 and re-start the next year at £100,000 and repeat the process. At the end of the tax year if the total value of my investments and cash is £90,000 I take out nothing and re-start the tax year at £90,000. So I am £10,000 down that has to be made up by the end of the next tax year and added to before I can take any cash out again. All dividends that I pick up during the year are paid out monthly to my bank account whether the running total is up or down and dividends don’t figure in the end of year calculations. So you can see why I tend to have a heavy focus on capital growth when I’m investing. I generally have a target of making 15% p.a. This is just a guide, but it keeps me disciplined in turning profits into cash on a regular basis. In recent years I make an allowance for inflation (CPI YoY figure for Sept) so actually my starting figure each year now grows a little every year. But that just complicates matters if you’re still trying to get to grips with my approach. I’ll try and explain trading around a position in more detail when I have more time … or better still, I’ll try and find an article on such an approach that will probably explain it better than I can. I think its easy to understand but I’ve been shocked by how many people who happily spread bet and trade real shares have difficulty grasping what is basically a simple concept.
Ripley94
28 Nov 2019
Building A Position Thanks Eadwig. Not sure i was confused as you know i am so busy with so many… i will look again when i get a mo if you give more detail. I actually thought we had a similar style also thought you more educated then myself and could study results of company’s ect. I know think i might do a more simple top and slice then yourself . I love learning everything so thanks again for posting your ideas . Have a good day … mine started well
Eadwig
28 Nov 2019
Building A Position Just to keep @PrefInvestor1 updated from an off topic discussion held weeks ago in a different thread. I have a long term holding of SMT in my SIPP @376p but decided a while ago to build a position (that means buying a tranche or two at low prices, selling part at higher prices and offsetting the average holding price with trading profits. This means I patiently and slowly build up a holding with a lower average. That is the theory anyway). I sold a tranche today @532.xp which now mean I have a large, single tranche at a holding average of @468.15p in my trading account. This process started with a first buy in March 2019 and this was the 5th trade of what will be a long process. If SMT rises above @550p I will sell 3/4 of the remaining tranche or will buy again below @500p (current limit order buy is set @480p) I know Pref understands ‘trading around a position’ but @Ripley94 was recently confused by my approach so I’ve included a brief explanation of the process because I note he has posted in other threads on SMT. It is a cautious approach because of the current over-extended global bull run and SMT is full of growth stocks, many of which tend to be badly hit at the beginning of a global downturn. If and when that happens my buys in SMT will become larger as many of its components are set to be industry leaders for at least a generation to come, I believe.
Ripley94
09 Sep 2019
SMT - change of recent fortune? Thanks Eadwig . When i read the article i thought there could be something in it , and like you thought of the secondary risk , maybe we should search for some value small caps ? I meet a guy who started the www.reitly.io web site. Just by chance at local authority swimming baths , i own a couple and did not realize they were “investment trusts†Land securities and British land are two !! A friends father advised him to buy London metric last year as he had worked for them appears they are also one i kept an eye and they have done ok .
Eadwig
09 Sep 2019
SMT - change of recent fortune? Ripley94: In particular, he likes technology and technology components companies, indicating that he is a “big believer in the continued growth and remote and virtual technologies. I certainly agree with him there. In fact most of my invested cash is in small technology stocks right now, (directly or via funds) or stocks that support E.g. miners who are after reserves of cobalt, nickel or rare earths . Such stocks don’t tend to move with market sentiment which is a good indicator that they are not included in the giant funds that swing market prices these days. SMT is an ‘investment trust’, not a passive index tracker fund. However, it may be at secondary risk if Burry is right as the stocks it holds may be over-priced as a result of what he is saying. SMT is trading at a slight discount (-2% approx) to its net asset value right now which gives a small measure of protection.
Ripley94
09 Sep 2019
SMT - change of recent fortune? “The Big Short†investor Michael Burry, who successfully bet against subprime CDOs before the financial crisis, now says another trend is signaling a financial meltdown, per a detailed Bloomberg report. The investor, whose story was made into an Oscar winning film and best-selling book, now oversees about $340 million at Cupertino, Calif.-based Scion Asset Management. One issue of major concern for Burry in the current environment is the flood of money moving into passive index funds, holding an estimated $4.3 trillion in assets. Burry argues that the popularity of passive investment strategies could bring about a similar event as the massive pre-2008 bubble, which was the result of a crash in rotten securities known as collateralized debt obligations (CDOs). Passive Investing ‘Distorting’ Price of Stocks and Bonds While investors’ full-scale move into passive funds and ETFs is seen as less risky than placing money in actively managed funds, Burry says index fund inflows are now distorting prices for the stocks and bonds that they are designed to track. He draws parallels to how a surge in CDO purchases distorted subprime mortgages preceding the last major market crash. “Passive investing has removed price discovery from the equity markets,†he said. “The simple theses and the models that get people into sectors, factors, indexes, or ETFs and mutual funds mimicking those strategies – these do not require the security-level analysis that is required for true price discovery.†Just like funds were quickly pulled out of the system over a decade ago, the investors expects major outflows from passive investing, yet did not offer a time frame. He is certain, however, that “it will be ugly.†“This is very much like the bubble in synthetic asset-backed CDOs before the Great Financial Crisis in that price-setting in that market was not done by fundamental security-level analysis, but by massive capital flows based on Nobel-approved models of risk that proved to be untrue,†added Burry. This comes as passive investing funds have nearly caught up with those managed by active equity funds in the U.S. stock market, at $4.305 trillion as of April 30, versus $4.311, per Quartz. “The trend toward low-cost fund investing has gained momentum,†explains Morningstar analyst Kevin McDevitt. What’s Next? “Like most bubbles, the longer it goes on, the worse the crash will be,†Burry told Bloomberg in a detailed interview. He recommends investors look at small-cap value stocks, since they are typically under-represented in passive funds. In particular, he likes technology and technology components companies, indicating that he is a “big believer in the continued growth and remote and virtual technologies.†SPONSORED Learn How to Invest Like the Pros Do Need to take control of your financial future? Online Trading Academy London is offering a free half-day class , where you will learn about our patented supply and demand strategy — built to help you maximize gains and manage risk in any market. Sign up today.
Eadwig
09 Sep 2019
SMT - change of recent fortune? Hi Ripley, I think it is an excellent fund and am buying it at around @500-@510p and selling it about @535=@555p while slowly building a position. I’m approaching it carefully because I do believe it will take a relatively large hit in any kind of market crash due to the high growth, high P/E nature of the stocks held. I do believe that such a crash or correction is overdue and we will see it once the USA economy falters. It will be a correction of 20%-40% in the major indices. However, at that point, when the big crash comes, I shall be heavily loading up on this fund as a major recovery play. It is packed full of high quality tech companies which I personally believe will be up front and centre and growing in the global economy of the next decade or two. It has some names I wouldn’t pick myself, one or two omissions I don’t agree with but generally I think it is a fantastic way to be involved in some of the fastest growing, most successful, major global companies. E.g. Amazon, Alphabet, Tencent, Alibaba, Nvidea, Facebook, Tesla, Baidu.
Ripley94
07 Sep 2019
SMT - change of recent fortune? SMT… XXXXX HI Eadwig . Not sure if you think this is a good buy or not ? A friend of mine picked it for a large lump couple of months back . He only invests in collective investments .
Eadwig
03 Sep 2019
SMT - change of recent fortune? its packed full of growth companies that will be hard hit ( in share price) when the big crash comes
red_rose_wizz
02 Sep 2019
SMT - change of recent fortune? Interesting that SMT is now at a discount to NAV which has not happened for some time. Any ideas as it is a global trust that continues to grow
Eadwig
19 Jun 2019
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Eadwig
19 Jun 2019
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Eadwig
07 Apr 2019
£5 a share A year later still @500p a share, allowing me to top up. Slightly higher now. I think the market move against tech is largely over or priced in. Holding % of portfolio Amazon.com Inc 9.09% Illumina Inc. 7.78% Alibaba 6.77% Tencent 6.26% Tesla Motors Inc 6.16% Kering 3.64% Netflix Inc. 3.23% Ferrari NV 3.03% ASML Holding 2.93% Ant Int 2.42% As of Feb 28 2019. Top holdings excludes cash and cash equivalents.
Uncle_Doug
10 Oct 2018
3% rise so far today …and a 6% fall today. Any idea why?
Ben_Alligin
03 Aug 2018
3% rise so far today Any idea why Scottish Mortgage is near the top of the risers today?
