DIY Investor Magazine
| August 2017
54
HUMBUG - AKA ‘THE TORTOISE’
FAGIN - AKA ‘THE HARE’?
OR
DIY Investor’s ‘Diary of a Private Investor’ is written
by two trading partners Humbug (because he owns a
sweet shop and possibly because of his manner) and
Fagin (because he like to pick the market’s pocket); as
part of their product development and market testing
exercise, for the tax year 2017/18 they decided to
challenge each other to see who could produce the
best return on a real life one hundred thousand pound
portfolio, both using different variants of the momentum
trading system they’ve developed.
UPDATE – HUMBUG: DOWN £2,000, AND TURNING
TO LEVERAGE
Rome wasn’t built in a day apparently and you also can’t
build a balanced risk-averse investment portfolio that
embraces value, quality and likely momentum in a day
either.
It’s taken me about four months to get most of my
‘building blocks’ in place, so to use a phrase it was dot
on the cards that
Fagin
would race ahead of me in the
early stages of
The Great British Trade Off
and he’s
done just that.
I’m investing whereas he’s trading and in the last couple
of months he’s really been banging in the short term
results and is currently some £11k ahead of me, trading
brilliantly and proving a formidable opponent. However
far from being despondent I’m quietly optimistic for
many reasons and hope the tortoise will have overtaken
the hare by April 2018 when the competition ends.
Whilst my portfolio itself is £2k down as I write, it’s taken
both time and cost money to weed out the inevitable
mistakes and sell off the under performing shares and to
begin to double up on the outperforming ones, such as
Games Workshop (GAW)
and
McColl’s Retail (MCLS)
- both are up over 25% since I bought in and I hope that
they and others like them with powerful momentum will
power me to victory.
I believe that I’ve now got my money riding on
companies that are likely to significantly outperform the
overall market in the medium term and further, after my
latest ‘weeding out session’ I’m now only 75% invested
and am planning to use that £25k balance to fund
margin trades to leverage my winning positions further
still.
I say ‘significantly outperform the overall market....’, as
an investor I’m tied to the overall performance of the
market more than a trader and the danger I face is that
there may be a significant correction in the next few
months and along with everything else my selection of
shares will fall sharply. So even if they do outperform
they will still lose.
I’m well aware of the risks I run having a long only
portfolio and using leverage as well, so I’ll make sure
I’ve always got enough spare capital to get a protective
index short on if I need to. Other than that as I don’t
want to be jumping in and out of the market all the time
there is little more I can do.
THE GREAT BRITISH TRADE OFF:
HUMBUG VS FAGIN, TRADING VS INVESTING
WHO WILL MAKE THE MOST MONEY THIS YEAR?
