Wednesday 19 February 2014

Gold glisters

That rally has done well. The S&P 500 is almost all the way back to its all time high. My pull out on the 24th January was reasonably timely. I lost money on the way down but it could have been worse. My return on the 12th February was a bit late and I would have been better off staying in for the ride.



Three shares would have carried me through: CCM VIPS and DHRM. All three weathered the storm brilliantly. But how was I to know? You can't play this game using hindsight. You can ONLY make your decisions based on what's in front of you at the time. What I saw was a risk that all my recent profits could vanish and I played the 'better safe than sorry' card. It turned out to be the wrong one but it could have been otherwise. It's like paying your insurance premium, all that money down the drain year after year but one day the floods, or the big freeze may come.

Now I'm climbing back on board the train to riches (Ha-ha. If only. I am still shovelling manure, but I continue to make progress and my losses are diminishing). Now the balance of my portfolio is much changed. Working my way through selection criteria to find the ones which currently generate the best profits (Uniserches in Vector Vest terminology) brought that change in emphasis about. I find the best performing selectors are throwing up mining, and especially gold shares and that is where my new buys are concentrated.

Mining shares are doing very well for me. They are up 9.1%  in three trading days. In contrast I bought some China shares at the same time which have risen by 1.6% (that includes losses on SMI which came in with bad results, tanked, and which I have ditched). The mixed bag of shares in other sectors has also treated me kindly even though I had to throw out TBI which dropped 15%. The star of this group was SYMX which made 70% in two days!!! That was a profit which I took straight away.

China's economic miracle 


Last night I watched a TV program about economic growth in China. The thrust of the analysis was that China had survived the 2008 world financial crisis by spending massively on infrastructure. And the costs are funded by unsustainable bank borrowing. (Sounds like Keynes to me)  The program predicted it would all end in tears. But the presenter, Robert Peston, did not make clear whether China's massive build up in debt was any worse than that generated by unprecedented money printing which has held Western economies together since the financial crash.  Nor did it comment on the fact that infrastructure is forever while money printing generates no future gains. Just think of how we still enjoy the fruits of Victorian infrastructure spending.

I keep an open mind on the subject and watch sentiment by observing where money is moving. The revival in the gold price suggests that the flirtation with politically created currencies may be over. The lustre has come off Chinese shares so I am moving my cash elsewhere too, but I expect I will be back.

Currency woes


One final point to mention. The Pound Sterling continues to strengthen against the US $ so my profits on the US market are being made against a prevailing wind. And still those US profits come (6.1% in three days), while my UK portfolio struggles (<1%).

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