DIY Investor Magazine
| August 2017
50
Slightly more exciting was
Anglesey Mining (AYM)
which I bought at 4p and sold out at 60p; I bought other
chunks at around 20p - not quite so exciting, but it was
a big winner for me.
A downside of this was that I then got over confident
with small miners thinking I could do no wrong and
proceeded to lose plenty on other stocks of a similar ilk
More recently I have done really well on
Trifast (TRI)
,
around 500% up,
Boohoo.com (BOO)
, 400% and
Tristel TSTL
250%.
I don’t worry too much about the individual investments
that make up my portfolio - what matters is how it
performs year in/year out (enabling me to live my
relaxing lifestyle!).
A thing that unites my big winners is that they often
started out badly but at some point I managed to
average down at a good price, boosting my returns
hugely; e.g. on BOO I first bought at around 60p but the
shares tanked after a profit warning so I bought a load
more at around 25p and some a bit higher, around 40p -
they are now 233p.
When you invest in quality stocks (rather than AIM’s
speculative dreams) it seems that when they have
a hiccup, things get sorted out and they become a
recovery play; it is highly risky to average down and
never something to do without proper consideration,
but once the company is trading well again it is a very
valuable technique.
The duffer side is a no-brainer - in 2000 or so I put an
absurd amount of money into Just Group (’Butt Ugly
Martians’ cartoons) and made every mistake known to
man; when it went bang I blew about £14k which taught
me an important lesson about putting far too much
money into high risk, speculative stocks - and to ignore
the nonsense on bulletin boards!
WHAT ADVICE WOULD YOU GIVE TO ANYONE
CONSIDERING DIY INVESTING FOR THE FIRST
TIME?
That’s difficult to answer because there are so many
factors to consider.
Firstly decide whether you’ll invest in funds or individual
stocks and however you go about it, it is vital to diversify
and spread risk.
Sticking to stocks it is critical to learn about how to
value a company - the boring stuff like P/E Ratios and
NAVs etc; so many people pay lip service to this but it is
something that can definitely you give an edge.
The other critical thing to stress is how important it is to
realise that this is a game where the tortoises tend to do
very well but the hares have mixed results!
Setting sensible and realistic annual returns (around
10% is reasonable) and controlling risk is the way to go.
So many new investors go badly wrong because they
target crazy returns; aiming to get rich quick, in reality
they just rack up loads of losses.
The key to the game is compounding good returns over
the years, if you are young when you start then you have
a huge advantage. Oh, and patience pays……
Cheers, WD.
