During the turbulent trading the last few days I've made several top-up purchases, averaging down for the three companies in the portfolio.
- 500 SFR on the 6th of October, then another 750 on the 8th
- 1000 RCG on the 7th of October, then another 1000 on the 8th
- 1000 IPO on the 6th of October, then another 1000 on the 8th
This brings me to a total of 10 trades for approximately 8000 pounds total, with 145 pounds in trading cost. Cash balance is just over 4000 pounds and I am now holding stock as follows.
- 4000 RCG at total cost 2590 pounds
- 3000 IPO at total cost 2446 pounds
- 1500 SFR at ttotal cost 2861 pounds
An additional 1000 RCG, 1000 IPO and 500 SFR may be on the cards if the shares fall farther.
All of these are showing significant loss so far which was to be expected. In an ideal world I would be able to predict the exact bottom of the market then purchase all the shares I want at that instant. In the real world, I'm working full time so may not have access to trade at key times, the limits on trade quantities may prevent large-scale purchases and a rally can happen extremely quickly once sentiment turns. It is also not unknown for online broker services to fail at key moments due to enormous demand.
Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts
Thursday, 9 October 2008
Friday, 19 September 2008
Micro level inflation
At a time when inflation rates are making daily headlines and the central bank appears powerless to combat it due to the major credit market issues it is important to remember that it does not affect everybody equally. While macro level inflation can be useful as a general indicator it is unlikely that you are seeing the same level of inflation in your personal (micro level) finances.
Using an online tool such as http://news.bbc.co.uk/1/hi/business/7610430.stm can allow you to determine micro level inflation with some accuracy. As any growth investing should be done with a view to beat inflation after costs and taxes are accounted for, using a tool like that on an annual basis is a good idea and only takes a few minutes. Basically it lets you set the goalposts accurately and also cushions any emotional response from seeing all the depressing headlines in mainstream media.
It's also interesting to tinker with the inputs to see how modifying expenses affects the personal inflation rate. For example dropping a £200 expense of eating out reduces my inflation rate by 0.2% but not paying a mortgage increases it by 2.7%. If my mortgage was twice as large then my personal inflation rate would drop to 2% as more of my outgoings would be towards this static payment. Thankfully the mortgage industry hasn't yet had the idea to force inflation adjustment on mortgage repayments on us.
Using an online tool such as http://news.bbc.co.uk/1/hi/business/7610430.stm can allow you to determine micro level inflation with some accuracy. As any growth investing should be done with a view to beat inflation after costs and taxes are accounted for, using a tool like that on an annual basis is a good idea and only takes a few minutes. Basically it lets you set the goalposts accurately and also cushions any emotional response from seeing all the depressing headlines in mainstream media.
It's also interesting to tinker with the inputs to see how modifying expenses affects the personal inflation rate. For example dropping a £200 expense of eating out reduces my inflation rate by 0.2% but not paying a mortgage increases it by 2.7%. If my mortgage was twice as large then my personal inflation rate would drop to 2% as more of my outgoings would be towards this static payment. Thankfully the mortgage industry hasn't yet had the idea to force inflation adjustment on mortgage repayments on us.
Wednesday, 17 September 2008
A portentous moment
I'm calling this week as the point of greatest pessimism.
The stockmarkets may fall farther, the government may fall (or at least the Labour party leadership) there may be bankruptcies, recession and even depression to come but I'm marking this week and especially today as the point in time when it seems there is the least light and hope to be found anywhere. Talk today is of buying gold, of 3-4 years of being 'in the hole', of keeping money under the mattress, about not trusting banks and about the greatest regulatory failure of a century. It's hard to imagine a bleaker view of the future that still leaves the British pound as a useful currency. If things get worse, with major banks going bankrupt and tens of millions of people losing their savings, with government guarantees failing and major social upheaval then all that is perceived as 'normal' middle class lifestyle and society would evaporate.
Instead of this doomsday scenario I expect more turmoil as financial shake-outs continue, but gradually the government interventions, mergers and perhaps realisation that assets were written down too aggressively will turn the tide. When the media newsflow eventually turns positive the market reaction will be rapid and decisive, with what could be the greatest single day gains to be seen in a decade. Newly created financial giants will have dominant market positions with billion pound profits from retail banking and mortgages, secure and steady in much the same way as electricity and water utility company profit streams. When that happens I want to be fully invested in equity.
Today I transferred twelve thousand pounds to a stockbroker deposit account. Once the money clears, I will begin to invest it in long term recovery plays, with a view to buy steadily on dips in prices. Predicting short term price movements is beyond my abilities and I work full time so day trading is out of the question. Instead I will aim at long term buy and hold, building up stakes in quality companies gradually in anticipation of a future recovery and the boom when hot money returns to UK equity markets. The investment time scale is 15 years minimum and the money is a separate portfolio from my pension savings and mortgage repayment (both of which are in low cost index trackers). If I lose the entire portfolio I should still be able to pay off the mortgage and retire at a reasonable age, if all goes well I may be able to retire early and in greater comfort.
Taxes are a consideration as my ISA allowance is already maxed out and this portfolio will be subject to UK capital gains taxation. For the current tax year I'm already very close to max CGT allowance for this tax year so any profitable sales will be taxed. Trading costs will also be tracked closely, I'm using an online execution only stockbroker to keep costs down.
Tonight I'm hoping for a good nights sleep as tomorrow I need to be fully rested for crossing the Rubicon.
The stockmarkets may fall farther, the government may fall (or at least the Labour party leadership) there may be bankruptcies, recession and even depression to come but I'm marking this week and especially today as the point in time when it seems there is the least light and hope to be found anywhere. Talk today is of buying gold, of 3-4 years of being 'in the hole', of keeping money under the mattress, about not trusting banks and about the greatest regulatory failure of a century. It's hard to imagine a bleaker view of the future that still leaves the British pound as a useful currency. If things get worse, with major banks going bankrupt and tens of millions of people losing their savings, with government guarantees failing and major social upheaval then all that is perceived as 'normal' middle class lifestyle and society would evaporate.
Instead of this doomsday scenario I expect more turmoil as financial shake-outs continue, but gradually the government interventions, mergers and perhaps realisation that assets were written down too aggressively will turn the tide. When the media newsflow eventually turns positive the market reaction will be rapid and decisive, with what could be the greatest single day gains to be seen in a decade. Newly created financial giants will have dominant market positions with billion pound profits from retail banking and mortgages, secure and steady in much the same way as electricity and water utility company profit streams. When that happens I want to be fully invested in equity.
Today I transferred twelve thousand pounds to a stockbroker deposit account. Once the money clears, I will begin to invest it in long term recovery plays, with a view to buy steadily on dips in prices. Predicting short term price movements is beyond my abilities and I work full time so day trading is out of the question. Instead I will aim at long term buy and hold, building up stakes in quality companies gradually in anticipation of a future recovery and the boom when hot money returns to UK equity markets. The investment time scale is 15 years minimum and the money is a separate portfolio from my pension savings and mortgage repayment (both of which are in low cost index trackers). If I lose the entire portfolio I should still be able to pay off the mortgage and retire at a reasonable age, if all goes well I may be able to retire early and in greater comfort.
Taxes are a consideration as my ISA allowance is already maxed out and this portfolio will be subject to UK capital gains taxation. For the current tax year I'm already very close to max CGT allowance for this tax year so any profitable sales will be taxed. Trading costs will also be tracked closely, I'm using an online execution only stockbroker to keep costs down.
Tonight I'm hoping for a good nights sleep as tomorrow I need to be fully rested for crossing the Rubicon.
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