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Naked Trader - "So the markets continue to be bonkers."


So the markets continue to be bonkers.

Like a drunken alkie staggering up and down the street.

Who knows where he's going, which direction he's going to take or where he's going to end up.

What I do know, if you are tempted into volatile shares in this market it's the same as entering a casino and the house will beat you.

If you pick the right shares, stick with them and ignore the movements you might be fine.

What I am saying is the more you trade right now the more you will probably lose. Trade less, make more.

Remember everyone out there only makes money if you trade.

That includes everyone making you trade. The bulletin board guru wanting you to buy his or her shares.

The twitter feeds, the TV journos, and worse, the internet tipsters who need to pump out as many tips as possible and create headlines so they can make money out of you.

The main thing they want is publicity of any kind. Follow them at your peril.

Best thing to do? Don't look at bulletin boards, twitter facebook, Bloomberg. Clear them all out.

Make your own decisions. Be logical. Follow the steps in my book. Only buy when the time is right. Ignore them all.

The worst thing you could do right now is try and be clever and spreadbet shares up and down and try and get on the right side of movements. And especially if you use leverage.

Here's a trader who wants to share his experiences

His summer was so bad not only is he finished as a trader but he  can't pay the spreadbet firm he owes money to. Here's what he says:

"I think I broke all rules and because of that I'm done with trading, because if I can't be logically then I will lose money.

"So I've not had a bad run recently on longs and shorts.  Making real money and progress, following the charts and flows of the market.
But then decide to invest in a share because it looked cheap, then it fell with the China news, but instead of selling I hung and stupidly averaged down too.

"Then on that bad Monday I felt the floor fall away when the markets opened. My positions were closed by the spreadbet firm, any profit gone and now in  debt by thousands.

" I've never felt so stupid, so now I have to write or call them with a heavy  heart to find out how to pay them in installments, if they do that.

"I should never have relied on margin as black swan or market moves like this can punish you, if you don't follow the basic rules."

I suspect my reader's story was echoed around the nation.

What basic rules is he talking about? Where did he go wrong?

If the market is falling either stop out fast or decide you're holding. Never average down . You could end up just making losses even bigger.

But above all, don't overuse the leverage given out by spreadbet and CFD companies.

On a number of days this summer stocks fell so fast if you were heavily leveraged you'd have been called or emailed and asked for money

If you didn't have the money then your positions would have been closed like the  trader above and you'd be expected to pay up. If you can't pay up these debts are  enforceable by law and injunctions can be taken out against you.

Remember in effect "leverage" is just borrowing money. It's very seductive trying to make back losses quickly - but the market knows and will punish you.

My plan is to always hold excellent companies with low volatility outside of the FTSE, oil, gas, energy and mining. Get out fast if I got an original entry point wrong and hold for years if I get it right to make the big money.

Indeed I've had a pretty good couple of weeks and made a few quid. The FTSE short I told you about last time has really paid off well from 6270 down to 5980. I took a great profit on it.

I've bought some Alumasc (LON:ALU). This one looks to be in the middle of a rerating  and deservely so.

Profit is up 15% and it's moved into a net cash position. It is benefitting from a  much improved demand from UK construction.

It seems to be re-focusing, getting rid of some poor performing businesses which means its debt has now gone.

Dividend is up substantially and unless the market as a whole really tanks it looks  to have some decent upside of 25% or so.

It is certainly breaking out very strongly - a break through 200p would be very  promising for a rise up to 225p area quite quickly barring a market collapse but I feel fair value is around 250p so for me plenty of upside left.

I think a lot of investors find it hard to buy a share that has already risen a lot -  but believe me - it's often better buy something that's gone up!

ALU goes ex dividend next Thursday for a very decent 3.5p dividend, so that to look forward to.

I  bought  Regenersis (LON:RGS) . A return to a share I made some money on before and a bit of a loss too. This one has strongly come back onto my buy radar with major  upside potential.

This one looks extremely good value, with some good profits and net cash the current valuation looks too low and I'm looking for a re-rating back up to at least the 220p level  so I think there is massive upside.

Several things catch the eye here: it's trying to turn itself around by focussing  on digital security software (a hot sector).

It's bought up software firm Tabernus and it is strengthening its board with some nice looking appointments.

But best of all is a phrase I have come to love.

"Exploring strategic options". Last time this phrase was mentioned at AGA (LON:AGA),  six months later the shares were bid for and I made a fortune.

It is hoping to sell its aftercare business to re-focus - that would release tons of cash  and probably a massive special dividend and that could be the catalyst to re-rate the shares significantly.

Indeed with patience, I think there may even be the chance of doubling my money here over a couple of years. Time will tell!

As I mentioned last time Entertainment One (LON:ETO) looked a superb buy with great support in the 265 area and I bought some at 273.42 to add to my collection of the shares  from the 60p area.

The seller has now gone and the shares picked up by a conservative Canadian pension  fund.

So the overhang has gone, the pension fund won't be selling for a couple of years a nd if the share price hangs below 300p for too long a bid from a big US  content provider or TV or film outfit would be no surprise.

The price today of under 300 could look a steal very soon.

I've shorted AA - (bet on it to go down) - the statement was so so but the outstanding  problem here is the massive net debt of nearly three billion.

Shares have already come back a lot but I think more falls to come for AA with a fair value for me being still another 50p of downside.

I haven't a clue why shares in Nahl (LON:NAH)  dipped but glad they did as I picked  up some more, looked like a shake or a badly executed sell. Anyhow glad I did.

A very confident statement indeed from Nahl where all is going right. Best of all  and always good to see is a dividend hike. Around 335 at the mo, I think they could go to 450 in time.

I took part profit on Kainos (LON:KNOS) and then bought back! I got lucky here as the shares had flown higher it made sense to bank some (at 225.82) for a profit of £705 but then they slipped (Looked like a messy seller) and bought some back at 207.75 where they have been sitting for a bit.

A similar story with Quantum Pharma (LON:QP.) - I hadn't intended on buying more but I couldn't resist the sudden  drop yesterday and picked up a few more for the long-term. A great story this one.

With the bid for Jelf (LON:JLF) looking done and dusted I'm out for a fantastic profit making a profit of £5,212 from the shares bought last year and £656 profit from the shares bought this May.

So overall from my two site positions a profit of a lovely £5,868.

Farewell Jelf and all the best for your future!  

Red reached close to target so was sold for a profit of £1,023.Keeping an eye  on to buy back.

And Poundland (LON:PLND) kept on going down so hit a trailing stop for a profit of £273. Since then shares have gone down more and a placing today means there is a good chance to buy back coming up, just looking for the right price. (A pound would be nice)

All that selling up shows a combined profit for the website of £7,869.

Recent buys are going pretty well. Powerflute (LON:POWR) has gone up nicely and should get up and over 100p at some point soon though will probably take some pushing.

Photo-me (LON:PHTM) is holding nicely in the mid 150s after a little rise and P2P2 has been rising gently.

Carclo (LON:CAR) looks like it wants to push over 150 .

I think Dignity (LON:DTY) probably gets my vote for my fave share of the year so far up from 1700 to near 2400 giving me in reality profits of over £30,000 as I built up a substantial stake. I now just keep a trailing stop on it 250 points away from the action. It's continued to rise or hold steady in down markets.

Pets at Home (LON:PETS) has made me purr this year  personally up more than £20,000  as those of you who came to the seminar saw on the spreadbets!

Renew (LON:WIND) has done well now over 300 and holds nicely in choppy markets.. # Energy Assets up a quid and a half and produced a good update recently.  OPG is a longer-term winner, potential double coming up there. That one seems back on the rise.

Long-termer Vectura (LON:VEC) has had a good run this year and now doubled and a half on my first buy. This week it is having a good run. With patience, I think personally I'm going to make  more than £100,000 on it. The shares are sitting on close to a high now but finding 180 a struggle to get through,

Optimal Pay (LON:OPAY) has had an excellent few days - seems to have  left 300 behind.  The lovely GB Group just keeps on going  and been in since 20p.
To see it with another nought on the end is sensational. I still think it will end up  being bid for - but in the meantime sits at highs.  .

Lovely long-termer Porvair (LON:PRV) carries on going up , an excellent statement last week.
Been in it since 60p and now 320p

Spire (LON:SPI) is on the way back up after an early backer sold the last of its shares.

Nakedtrader  was created after I left my full-time job as a finance editor for BskyB to trade full-time. I had been writing an diary page for its teletext service since 1998 and decided as I was leaving to transfer that to the internet.
These articles are simply a "diary" of my life, or what you would now call a "blog". I detail what I've bought, sold or shorted and briefly why. I use various spreadbetting companies and stockbrokers to carry out the trades. I ignore commission but also dividends and I reckon the two balance each other up.
So you should be aware this is not a "tipping" site and I do not consider myself, nor do I want to be, a "tipster". In other words tipsters will urge you to "buy" something - and they generally are regulated to do so by the FSA. I simply state I have already bought or sold something personally. Because of that I am not "regulated" - so I am not an authorised "tipster". I am simply a trader who states his positions.
That is quite a big difference. I am not allowed to give what is called "Individual investment advice". And quite right too - I am not trained to do so. What that also means is if you e-mail me and ask me anything along the lines of "Should I buy or sell this share?" I cannot answer you except to say it is your choice! Of course I am more than happy to answer anything to do with general market/educational questions.
You should understand I always have an interest, and sometimes a big interest, in any stock I talk about. For website purposes my buys will often be to smaller stakes than in reality. So although my buys are real enough, as are the prices, I can and often do buy much bigger stakes in the shares. I may also "top up" in shares without declaring it and I will  sometimes deal more often than I mention on the site - mainly because of time pressure, if markets are busy. So though the buys on the site are around the £5,000 mark I may well deal in reality is sizes of £10,000 - £30,000.
My reasoning for this is I simply do not want to encourage people to blindly follow me into something when they do not understand the potential risk. It's ok for me because I can afford to lose money I put into the market. It may not be the case for you.  I am generally a medium term investor holding my shares usually between 1 week and on occasions up to 3 years. Average holding time is probably about 3 months.
So one of my main messages is: don't be tempted to follow me blindly into my choices. Quite often, as I play momentum, a share I have bought may already be much higher than when I bought it, especially as I do not update every day. If you follow me blindly you may be buying at a much higher price and you may end up selling at a much lower one.
You should ALWAYS do your own research and come to your own decisions on share purchases. If you follow me into something and lose money, you only have yourself to blame and not me. You should learn about markets and understand what you are doing before entering them.
The most risky way of trading of all is spreadbetting, which I do quite a bit. You should carefully read all the warnings that the spread betting firms issue together with all the warnings in my books. And never, ever, play with money you cannot afford to lose.
The aim of this site is to entertain, and perhaps stimulate debate, and that is the condition of entry !I really hope you enjoy reading about my triumphs and mistakes, but please, just watch and enjoy my triumphs and learn from my mistakes. Consider this site as entertainment. If this is your first visit to the Nakedtrader website site, I thank you for visiting me, and hope you will find this site useful. 
After reading and agreeing to the disclaimer, click the "I accept" button below. Please remember, I cannot give any specific advice, as to whether you should buy, hold or sell any individual share.
"The investments and other products referred to on the Naked Trader website should in no way be considered "advice" to buy or sell anything.  Naked Trader information is given in general terms only and does not constitute personal advice to any individual.  Investors are responsible for formulating and applying their own strategies based on their own personal circumstances. Naked Trader recommends that you obtain independent financial advice from an FSA-authorised intermediary before investing money.  Information given in previous editions of Naked Trader daily updates may become outdated and should not be relied upon unless confirmed by recent comment

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