Monday 20 April 2009

Trading the Budget

Fresh from my recent success of trading the G20 (still continuing, never sold LLOY stake and it has continued to fly in the face of reality). I have below my political based hunches for the Budget from a trading perspective.

As always, Cityunslicker is not a professional adviser and what my investments choices I make are purely for personal opinion and discussion and should not be followed as 'tips.'

Some of the ideas in the budget have been well trailed by now and so their announcement may in fact be a 'buy the rumour, sell the news moment.'

However, the budget this year has much more focus than in a typical year and I think the markets will watch it very closely. If the budget falls over very badly it is quite possible that it will begin the tipping point for the end of the current bear market rally. A 'good' budget will no doubt extend the rally until the annual 'sell in May and go away' phase.

Here are my four investments and the strike prices I received this morning:
PDG 16.75- Pendragon, a car retailer who will no doubt benefit from the now almost confirmed taxpayer giveaway to the motor industry. I nearly went with Inchape, but Pendragon has imminent loan talks with its banks - these are all going well at the moment so is adding bounce to share prices.
LBUL 33.31- I expect the budget to be a very sombre affair for UK plc, with awful numbers that will rock the markets. I have therefore closed my profitless short gold position and opened a long one for this week.
XUKS - (1290)This is a FTSE100 short tracker ETF, buying this as part of a pari with LBUL as I expec the FTSE to run on the back of the budget, even if not by much if the weekly 'up' momentum is strong.
PFC - (580.5)Petrofac is a north sea oil explorer, given trailing comments that Darling intends to cut exploration taxes then these should benefit. They go ex-dividend on Friday so that will give support all this week too.


Mark Wadsworth said...

Which illustrates my point that one of the main functions of government is to provide opportunities for speculators. It would be a lot more difficult in the absence of all these one-way-bets.

CityUnslicker said...

MW - two of them are bets against the government; the opportunities to speculators are dynamic too, so it is still hard to achieve a profit.

Mark Wadsworth said...

Sure, as a rule you bet against the government.