The virtual portfolio, “Bombed Out but Bouncing Back” (BOBBB) is living up to half of its name after one week.
Unfortunately, it is the “bombed out” bit, not the bouncing back part of the name that is apposite.
As suspected, the bid/offer spreads are killing this investment screen experiment that is likely to see a lot of churning of the portfolio.
You can get up to speed with the principles behind the investment strategy by reading Bombed out but bouncing back- a virtual portfolio of recovery stocks
In an ideal world, the portfolio would be traded on a day-trading basis, with the sell button being hit every time a stock’s share price falls below its 50-day moving average, and replaced by any new stocks thrown up by the stock screen.
Based on the massive losses sustained after just one round of trading – see below – it is probably as well that we are only adjusting the portfolio once a week, on a Tuesday.
The nightmare begins
Below are the stocks that have been sold and the profit (hah!) or loss made on each.
Andalas Energy: Sold 704,000 shares at 0.135p each. Raised £935.40. Gain/loss: -£65.20 (6.52%)
These were bought at 0.14p a pop. The shares moved back below their 50-day moving average almost the second I bought them, so were I a day trader who believed in technical analysis I would have dumped them for an immediate loss at around 0.1375p (plus commission).
Entu (UK): Sold 3,500 shares at 0.26p each. Raised £895. Gain/loss: -£100 (-10.05%)
These babies were ducking and diving above and below the 50-day moving average all week. Had I been day trading them I’d have blown £375 or so on dealing commissions alone. As it is, I’ve swallowed a £100 loss.
Frontera Energy: Sold 428,000 at 0.23p each. Raised £969.40. Gain/loss: -£30 (-3.0%)
Only a thirty quid loss? That counts as one of my more successful punts.
Tandem Group: Sold 788 at 115p each. Raised £891.20. Gain/loss: -£108.80 (-10.9%)
The old adage is “if you fall off the bike, get straight back on”. I think I’ll ignore that advice when it comes to bikes maker Tandem, where the rally (Raleigh?) has run out of steam.
Trinity Capital: Sold 80,400 at 0.625p each. Raised £487.50p. Gain/loss: -£512.50 (-51.3%).
This is the stock with the brutal bid/offer spread, hence the loss of half the investment in just a week. In truth, no one should be trading this one; I’d go so far to say no one should own it unless they know a lot about the Indian property market, which is the area in which Trinity invests.
Trading Emissions: Sold 33,000 at 1.76p each. Raised £565.80. Gain/loss: -£439.20 (-43.7%).
Another stock with an insane bid/offer spread and another stock that is not so much a falling knife as a radioactive lump of scrap.
Snoozebox: Sold 179,100 at 0.4p each. Raised £701.40. Gain/loss: -£298.65 (-29.9%).
About the best thing about this stock is its ticker symbol: ZZZ. I wish it were the sleepy stock its ticker implies but it is the sort that would keep me awake at night.
Where does that leave us?
Were this real money, that would leave me in despair. Seven trades closed out with realised losses of £1,554.25 (22.2%) after just one week.
At this rate, the inappropriately named Bombed Out but Bouncing Back virtual portfolio will be cleaned out after just over a month.
I am tempted to abandon the experiment after just one week, but that is not exactly giving it a fair chance and maybe it is one of those systems where the success of one or two stocks compensates for the losses on the others.
In that respect, there is a glimmer of hope offered by the three stocks retained from the original portfolio of 10, all of which are showing a paper-profit (excluding commission charges but based on the bid price):
- Agriterra is up 18.7%
- ECR Minerals is up 13%
- PCG Entertainment is up 16.6%
So, there’s hope, plus we have to kiss a lot more frogs yet – i.e. reinvest the money raised from today’s sales.
We’ve got a virtual £5,445.79 to invest in new purchases, and four new candidates. By my calculations that is £1,361.45 per share.
Throwing good money after bad?
These are the stocks thrown up this week by our stock screen.
The spread betting firm has had a torrid time of it since listing just over a year ago on the stock exchange at 240p each. You can now buy them for around 133p.
In common with the shares of other spread betting firms, CMC took a whacking in December when the UK regulator got tough on the trading of certificates for deposits (CFDs).
- Read Spreadbet firms tumble as regulator gets tough on CFDs
- Read CMC Markets sees shares jump as it inks “major stockbroking partnership” in Australia
The shares have perked up this month on news of a tied with Australia and New Zealand Banking.
Purchase: 1,010 shares at 133.2p a share
BOS GLOBAL HOLDINGS Ltd (LON:BOS)
This Aussie office productivity software firm is one we have been following closely on Proactive Investors.
- You can read the investment overview here.
- Read BOS Global surges after patents progress down under
It’s only been listed in London since October and recently received a list from a patents decision down under.
Purchase: 12,525 shares at 10.75p each
Are we not men? (We are Devro).
The sausage skins maker was put through the mincer after a profit warning in November but has been steadily recovering this year.
Results last week held out the promise of a return to growth this year.
Purchase: 681 at 197.5p each.
Wolf Minerals PLC (LON:WLFE)
The developer of the Hemerdon tungsten project in Devon saw its share price break above the 50-day moving average this week when it updated on its secured bridge loan facility with Resources Capital Fund.
Purchase: 23,380 shares at 5.75p each.
Scores on the doors
Company
No. of shares
Total cost
Average price paid
Current bid price
Current value
Profit/ loss £
Profit/ loss %
492,000
£999
0.2p
0.24p
£1,186
+£187
+19%
BOS Global
12,525
£1,361
10.87p
0.10p
£1,252
-£109
-8.0%
CMC Markets
1,010
£1,360
134.69p
132.5p
£1,338
-£22
-1.6%
681
£1,360
199.7p
196.25p
£1,336
-£24
-1.7%
ECR Minerals
58,000
£1,001
1.73p
1.8p
£1,044
+£43
+4.3%
PCG Entertainment
518,400
£1,000
0.19p
0.24p
£1,218
+£218
+£22%
23,380
£1,359
5.81p
5p
£1,169
-£190
-14%