Page 50 - DIY Investor Magazine - Issue 23
P. 50

 SOGGY BOTTOM – THE GREAT BRITISH TRADE OFF FINAL WRAP BY HUMBUG
I’m hugely competitive and hate losing so today is a sad day in my house. After two and a half years of The Great British Trade Off, I concede defeat; I’ve thrown in the towel and retired hurt.
GBTO started in April 2017 as a real money competition between Fagin (because he likes to pick the market’s pocket) and me, Humbug (possibly because I own
a famous sweetshop and possibly because I’m a miserable bastard). Fagin was the trader, I was the investor.
We thought it best to use real money, our own real money; virtual money scenarios do not carry the fear and greed that actually stalks the market and we wanted this to be 100% real – which was the better way to make money in the markets – trading or investing?
We each allocated £100k to the competition, Fagin used part of his SIPP; I used part of my ISA. We ignored platform charges but included all the other costs of trading and investing, brokers’ fees, stamp duty and buying and selling spreads.
I won’t bore you with a blow by blow account - if I do, we’ll all lose the will to live; especially me.
In summary, I had an appalling first year despite the FTSE All Share Index rising 250 points; I was in two minds whether to invest all my money on day one, or whether to buy in as and when I saw value.
I did the later, but got spooked by Fagin who was banging in great trades right from the outset; as a result I did something stupid and tried to play catch-up. It doesn’t work.
‘BUT IT WASN’T PRETEND MONEY, IT WAS MY OWN REAL MONEY I WAS CHUCKING AWAY’
‘VIRTUAL MONEY SCENARIOS DO NOT CARRY THE FEAR AND GREED THAT ACTUALLY STALKS THE MARKET’
It’s quite possible to both trade and invest at the same time if the activity is kept separate; what doesn’t work is a hybrid of the two.
That was my mistake; in a pretend money competition I think I’d have taken bigger and bigger risks and might have pulled it back, but more likely would have blown the account up.
But it wasn’t pretend money, it was my own real money I was chucking away, although despite almost everything I did being wrong, ruthless money management meant at no time did I put myself in danger of a catastrophic loss - the largest drawdown I suffered was around 8%.
So, I went sailing and in the peace and solitude had a long think; with a revised plan, by mid-2018, although Fagin was over 30% ahead of me, I matched him month on month - his lead didn’t increase and for a short time I began to claw it back.
That changed in the savage market decline from late last summer to the start of this year when the FTSE All Share Index fell from 4300 to 3600.
My system got me out of the market without too much damage but I then had to sit on the sideline as Fagin continued to trade, making money as he went.
This year in general has been good for both of us, although the sharp decline in July was more of a problem for me than for him.
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