Monday 15 September 2014

Just in time?

Liquidation day


Last week I pulled out of the US/China market banking 5% profit in about 6 weeks. It looks as though I was just in time. At worst I would have lost two thirds of my accumulated profits in the three days following disposal, As of today, following a slight recovery, I would have lost about half. Of my 20 positions only 7 are up on the liquidation price. And only one, VIMC has made significant headway.

Of the portfolio 12 were winners and 8 losers over the six weeks while I was holding them. Biggest profits were made on BITA 59%, VIMC 33% (That would have gone on to make 58% if I had held on). Two more holdings made more than 20% and another 2 made more than 10%. On the downside there were four 15-20% losers.

I think this is an endorsement of my shotgun approach to picking shares. I look for a selection system which has a good backtest record, and a sector that looks promising and then buy a large assortment. There will always be losers as well as winners and, in advance, its impossible to distinguish the sheep from the goats. You buy the flock and hope that the majority turn out to be sheep.

Market situation


Just at the moment the major markets (US, UK, DAX) seem to be stuck in a rut. The BRIC markets have taken a tumble of over 5% and Hong Kong is looking ugly too. China is struggling. Only the Nikkei is making progress. For a change here is the FTSE All World Index which shows the current pull back.



Both long and short term US treasury bonds are falling in price signalling higher interest rates. The chart below shows that bond prices have been weak since the beginning of last year but have recently staged a rally. It looks as though that rally may be faltering. Higher interest rates spell doom for the stock market.


All in all a depressing picture. I am glad to be sitting on the sidelines with my US portfolio.

My UK selection continues to hold firm and I have made my target 17% return on that holding since April. The shares I bought starting in July are up about 8% in 10 weeks. I like the fundamentals of my shares so I am sticking with them but I will run for cover at the first sign of trouble, as I did with my US shares.

Here are some more San Fransisco murals






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