Tuesday, 5 January 2010

Trading 2010 - current strategy


An update for those of you interested in my current positions for the start of 2010.

Firstly, 2009 ended with a total profit for both ISA and non-ISA portfolios of 150% - how I would love to repeat that this year, but somehow I doubt lightning will strike twice. My main investment of the year was Minerva and this ended up 450% on the year and in the FTSE All-share top ten!

At the moment all those predicting a double dip are off-beam, with QE the stock market will keep on going this quarter and more if QE continues. Only when we have a Government debt crisis will a dip possibly occur and this won't happen until the election. As such I remain long on stocks with only 10% cash balance and no short positions (very tempting to short gilts though). Interest rates will remain low too, giving a further boost to the recovery. This is of course all in line with Labour's scorched earth strategy of creating a min-boom now which will bust and hit the incoming Tories with a lower margin of victory and a probable double-dipping economy.

Also despite the boom I see commodity stocks as the best current pick. Oil and Copper should be strong for the next few months, if not super bullish. This will raise the prices of these shares. Financials will be weak in the UK, Retailr too, manufacturing and food producers may seem some renewed M&A. Property is on a knife edge as a continuation of the recovery in commercial property prices could see the sector continue its long-run - but that is very much in the balance.

I will go into specific stock picks later in the week.

What do you see as the trends to buy and sell? What are your positions?

20 comments:

Steven_L said...

Sold Minerva and my least performing fund just before new year.

Have some cash sitting there to buy something with but no idea what to buy yet. Scouring the net for tips the check out ;)

Will keep saving into the other 4 funds on a monthly basis too.

Richard Elliot said...

Dripping money into my UK based ISA funds on a monthly basis.

Holding some banks (not that clever, but going to sit on them long term), AST & EMED.

I am currently trying to pay down the mortgage before hyper-inflation hits and rates shoot up.

John East said...

I began to get very nervous in December when gold shot to $1200+ but with the recent orderly pull back and consolidation around $1100 I'm more than happy to stay a gold bug for another quarter.

I can't wait to short the FTSE, but that's always been my problem - jumping too soon. As you say, Brown's scorched earth policy puts a floor under the market up to June. Cameron's honeymoon could extend this to October/November, always good months for a crash.

Of course this scenario is widely recognised as a likely outcome, which probably will ensure that something completely different will unfold.

Diplodocus Rex said...

A bond crisis due in January (treasury officials overheard) so by your own assessment stock market crash thereafter.

The insider dealers have already been tipped the wink:
http://market-ticker.denninger.net/archives/1815-Uhhhhh...-Ok,-Keep-Buying-Fools.html

Equities are a baaaad place to be.

Anonymous said...

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Budgie said...

I have 20 stocks of only hundreds each, so that any one going down won't break the bank, but of course the dealing costs loom large.

Most are small oils and some mining AIM like AFE, AST, EMED, MXP, PPA, XTR, plus MNR and IERE in property all tipped by CU (thanks). Also my own includes RR and SMDR (good) and CDS and SKP (truly awful).

I regard the UK government debt as horrifyingly bad, so I prefer assets to cash now. The UK will (I think) lose its AAA rating, because Brown is delusional. He is so detached that he may get deposed before the GE which will be good for the UK, bad for the Tories. I do not think QE will lead to double digit inflation in 2010, but we will have higher inflation due to a weak pound.

CityUnslicker said...

PPA flying today at last Budgie!

I have some thoughts on inflation I will share later.

Diplo - the market needs to climb a wall of worry from now on to be a real bull market. Show me the data that says a big correction is due, there is none, all points to slow exit from a recession.

John East - Gold will only shine if there is a debt crisis, otherwise it is curtains for the bull run. I am glad i am out there are better opportunities elsewhere. I would not be keen on shorting the FTSE unless there is a crisis either, downside is what 10% or 20% tops?

Anonymous said...

People like constructing a narrative. Here is mine.

The labor party will pump money into the economy until the last minute to make sure the appearance of a good recovery persists. base rates will not rise, QE will carry on for H1 '10. The UK stock market will probably rise.

People have bought their new TVs in the winter sales and only the privileged middle class will go on a foreign hol this side of July. Not that many will care if the pound tanks, or we lose the AAA rating.

To win the next election both sides will make promises that are completely unsustainable. No-one will vote for a party that promises to make cuts to your daughters school or make your brother-in law who works at the council redundant.

Once the cons have won, the party will be over, there will be a hangover. Inflation will start to rise, partly on the back of a currency shock and firm commodity prices. Interest rates will rise.

The cons will make a number of nasty discoveries and make deep cuts - possibly too deep - as they did 79-81.

This may cause a 'double dip'.

(UK) stock markets will fall on sentiment, but recover when it is remembered that the largest companies have much of their earnings overseas.

Inflation and interest rates will drift upwards and not many will worry.

wisely or not, all my money is overseas, half europe (germany) half asia (ex japan).

Budgie said...

Anon 9:30pm. Your predictions sound similar to mine. Great minds?

However your statement that the Tories may have cut too deeply in 1979-81, particularly in light of Brown's views about this, is wrong.

Whatever time span you choose the total pain will be similar. And the longer it takes the more chance that the government/people will chicken out or forget, leading to worse trouble.

Brown's debt is only borrowing from our future selves and so is a kind of fraud. The quicker we are rid of it the less money it will cost us.

Mu Tai Dong said...

Buy moon pies sell noodles!!

CityUnslicker said...

Anon - Very plausible. Big chance the real pain is delayed until 2011 though in that scenario.

Main danger is that a real sovereign debt crisis hits this year, the politico's bottle in and the IMF come into to deliver some harsh medicine.

I don't think the UK populace is ready for that trauma, espcially not the public sector (becuase when you think about it, that would be the sole target).

Steven_L said...

No they aren't. Most of the 50-somethings I work with the in public sector actually believe everything was OK in 1979 before MT got in and ruined it all.

History is about to repeat itself - they think everything is getting better now. A few of them have moved house in the last year and are nodding appreciatively as prices start to rise again.

They aren't happy with their 1% pay offer either - they think they are losing out to the bankers and deserve a lot more.

I think council budgets have been settled for the next financial year now, so any emergency budget will probably make big cuts for 2010/11. Then Osborne is going to try and reform their pensions - they won't like that either.

Lot's of fun and games ahead.

Budgie said...

Steven_L, your observations sound all too horribly true. But the Tory slogan "we cannot go on like this" also hits the nail on the head. As you say lots of fun and games, unfortunately.

Anonymous said...

I have been reading about gilts etc. All the information is about how you buy them. What I can't seem to find is how do you short them?! Do you use someone like IGINDEX or CFD's? If so, on what platforms/trading sites?

Anon@9.30 said...

Budgie / Uslicker :- not so much great minds as groupthink leading us down the same wrong path :)

The question that is left at the end of the story is, if you think the same way, what do you do to profit from it.
One valid approach is to pick and trade/take profit as it arises. I do not want to/cannot do that.

So you can tell me how wrong I was in 6 months:

1.I think the GBP will tank (-11% - close to GBP/EUR parity around the election)
2.I think the FTAS/SE will rise by about 7-14% over the same period (to an EUR investor return=-3-+3%)

Volatility will rise and whether or not you make money on EMED etc will depend on the day you bought and sold.
So I have put my money outside the UK and intend to leave it there for 6 months - hopefully by then the ECB will have increased it's rate - and that will before the BOE does.

Savonarola said...

Forecast - haven't a clue other than £ down and FTSE going nowhere in 2010. We are the new Japan.

Bought the banks in Feb and will keep buying on weakness. Divs will return 2011/12 and grow from there. In 3-5 years a reversal of prior provisions will boost divs/profits.

For fun and profit I have tried to identify some junior miner potential ten baggers.

PLAA Plat in SA
PRL resources incl uranium Steven Dattels md has been buying
KHA uranium developer
AAAM WAfrica iron diamonds gold Chairman big recent buyer.

10 bagger within 5 years CCAP - inv man group focus on Russia. Aum up 50% in 2009. Profits will rocket in 2010

CityUnslicker said...

I use IG Index for all my shorting or ETF's..hopefully some bright spark is working on an ETF short gilts as a product for this year!

Pi said...

I have left 25% in cash because I think there will be a market correction and buying opportunity soon.
Ones I like from a modified Ben Graham screen are Chaoda Modern Agricuture, Eurasian Nat Resources & Astra Zeneca, sorry no ten baggers. I think there is a lot of political risk in the UK but it will be driven by the US and Europe, once election is settled things will be generally OK as markets will see the result. Markets do not like uncertainty so things like possibility of hung parliments and Lib/Lab/Con pacts will cuase volatility in the election run up.

If you fear inflation - go index linbked gilts or ILG fund?

Pi.

simon said...

No longer trade stocks - lost a bomb in the dotcom era.
Tentatively looking at forex - trying out a forex robot

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