Hi all,
Although I don`t generally do this, I have resorted to some short term trading in BP, to bring my average buy price down. I sold some of my £4.22 holdings for break even a few weeks ago and have now just re - bought at £3.79. So I have 2 lots under £4 but offset against the ones I bought at £5.68 and £5, my average is £4.30. Although this was not the original plan, I am happy to hold BP for the long term at that price, looking for £5 again next year.
Severn Trent is now £12.85, from £13.41 when I sold. I am very happy I took some profits in the Portfolio. Never be scared to take profits, even on a good asset such as Severn Trent. Imperial Tobacco look good value and holding above the £18 support line currently, even as the market falls. A very good defensive asset to hold in times like these.
The world markets are very weak at the moment, as fears of a double dip continue to persist. My view is that equities, especially high yield ones look too cheap relative to other assets such as govt bonds, cash or property. Even with a double dip scenario, I think defensive companies such as GlaxoSmithline, AstraZeneca and National Grid with yields of 5-6.5% will outperform cash(with rates unlikely to go up anytime soon)
Just make sure you have a diversified Portfolio and "hold at least your age in cash". That is the absolute minimum weighting I would have in cash because you never know what black swan event is round the corner. Then if the market tanks further from here, I you will have cash remaining to buy into further weakness and average down your holdings for the long term.
Friday 20 August 2010
Wednesday 11 August 2010
Another Defensive asset added
As soon as I sold Severn Trent I moved the money into Imperial Tobacco at £18.01.
You can see on the chart there is strong support at £18. It has a yield of 4.6% and is seen as very defensive. A re-rating such as the one that happened on Severn Trent, looks likely on this share over the next 6-12 months. They have been struggling so far this year and I thought this was a good time to enter, with the worries about growth effecting risk appetite among investors. They are likely to build stakes in more defensive shares that are undervalued such as this share.
You can see on the chart there is strong support at £18. It has a yield of 4.6% and is seen as very defensive. A re-rating such as the one that happened on Severn Trent, looks likely on this share over the next 6-12 months. They have been struggling so far this year and I thought this was a good time to enter, with the worries about growth effecting risk appetite among investors. They are likely to build stakes in more defensive shares that are undervalued such as this share.
Tuesday 10 August 2010
Sold Severn Trent for 40% profit
This week I sold Severn Trent for £13.40 for 40% profit(as well as the final dividend). Bought at £9.60.
Although I believe they are a good long term investment, they have risen so much so fast and can see other shares that are now better value currently. The dividend is still good on Severn Trent but the capital gain might be limited unless there is a bid approach.
Although I believe they are a good long term investment, they have risen so much so fast and can see other shares that are now better value currently. The dividend is still good on Severn Trent but the capital gain might be limited unless there is a bid approach.
Monday 9 August 2010
Buy low, sell high
Hi all, sorry I have not updated the blog for a while. It was a tough time in the correction. The FTSE 100 at one point was -18% since the start of the year, close to a becoming a technical bear market. Since the low in May we have bounced back strongly.
I have continued to buy on dips and increased my appetite for risk the lower we went. I added more BP to the Portfolio at £3.40 averaging down my other buys. I misjudged how bad the oil leak was and to be honest not happy with how BP communicated the situation. But now, I am where I am and still believe they are undervalued and will hold them for the long term and wait for the dividend to be restored.
However all my other buys into the dip are looking good. Aviva are up 27%, AstraZeneca up 14%, BT up 22%. I am also still doing very well on other high income shares in 2010, Severn Trent(+24% YTD) and United Utilities(+18% ytd).
My UK bank holdings are also doing very well and driving gains in the portfolio. Lloyds is up 50%, RBS up 76%, Barclays up 15%
Some of the shares struggling and holding back the Porfolio, are Glaxosmithkline (-14% YTD) and surprisingly Tesco (-7%). I think both of these are undervalued significantly and will bounce back. My 2 absolute returns & bond funds are holding back the portfolio’s gains as well. My Chinese and Japan funds are also not doing well so far this year but are good long term prospects.
However as I have always said, make sure you have a diversified Portfolio. Although the total gain in my Portfolio is lower than if I just invested in high risk stocks like the banks and miners, I am aiming for consistent profitability over the long term. As Warren Buffet says, rule no.1 Never lose money, rule no.2 – Never forget rule no.1
The stocks, bonds and shares Portfolio is up 5.5% YTD vs a 1% gain in the S&P 500 and 0.5% on the FTSE 100. I am happy with this given that BP is taking 1.0% points off my portfolio currently. On top of this I estimate my income will be around 3% at the moment, which would equate to 8.5% in total return for the full year. I am hoping that by the year end I can increase the 5.5% capital gain up to about 7% to give me a 10% gain overall in 2010.
Of course a lot of this depends on how the stock market does for the rest of the year. Forecasts vary from 4000 to 6000 on the ftse100. My estimate at the start of the year was 5800. I still believe equities are a better asset class to have your money than in cash or govnt bonds and will buy on dips into further drops in the stock market.
I have continued to buy on dips and increased my appetite for risk the lower we went. I added more BP to the Portfolio at £3.40 averaging down my other buys. I misjudged how bad the oil leak was and to be honest not happy with how BP communicated the situation. But now, I am where I am and still believe they are undervalued and will hold them for the long term and wait for the dividend to be restored.
However all my other buys into the dip are looking good. Aviva are up 27%, AstraZeneca up 14%, BT up 22%. I am also still doing very well on other high income shares in 2010, Severn Trent(+24% YTD) and United Utilities(+18% ytd).
My UK bank holdings are also doing very well and driving gains in the portfolio. Lloyds is up 50%, RBS up 76%, Barclays up 15%
Some of the shares struggling and holding back the Porfolio, are Glaxosmithkline (-14% YTD) and surprisingly Tesco (-7%). I think both of these are undervalued significantly and will bounce back. My 2 absolute returns & bond funds are holding back the portfolio’s gains as well. My Chinese and Japan funds are also not doing well so far this year but are good long term prospects.
However as I have always said, make sure you have a diversified Portfolio. Although the total gain in my Portfolio is lower than if I just invested in high risk stocks like the banks and miners, I am aiming for consistent profitability over the long term. As Warren Buffet says, rule no.1 Never lose money, rule no.2 – Never forget rule no.1
The stocks, bonds and shares Portfolio is up 5.5% YTD vs a 1% gain in the S&P 500 and 0.5% on the FTSE 100. I am happy with this given that BP is taking 1.0% points off my portfolio currently. On top of this I estimate my income will be around 3% at the moment, which would equate to 8.5% in total return for the full year. I am hoping that by the year end I can increase the 5.5% capital gain up to about 7% to give me a 10% gain overall in 2010.
Of course a lot of this depends on how the stock market does for the rest of the year. Forecasts vary from 4000 to 6000 on the ftse100. My estimate at the start of the year was 5800. I still believe equities are a better asset class to have your money than in cash or govnt bonds and will buy on dips into further drops in the stock market.
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