I've read the brilliant book on the guy who helped to cause the flash crashin 2010 - the book is "Flash crash" by Liam Vaughan What a read especially if you're a trader of any kind. It's like a thriller with lots of twists and turns.I want to be careful not to give too much away in case you know little of the story. But it's all about how a mummy's boy with no social skills ended up partly causing the biggest fall in shares ever from one computer in his bedroom. Indeed part of the reason the crash happened was his mum called him down for tea. In the end it's a lesson if you let machines and algorythms take control the only winner are the robots and the rest of us can get lost.
Overall it is a fascinating tale of a lad who didn't even want the money and neverspent any of it and thought he was simply doing what bigger players were up to: winning money by ensuring they couldn't lose and taking on little risk. So after reading you will feel sympathy for him. Anyway especially if you use level 2 you will be amazed at how it was all done and the main markets so easily manipulated with very little real money put at risk.
Indeed if you are going to be attending one of my online zoom seminars I will even show you on level 2 exactly how he did it. The end of the story and what happened to him is incredible - I won't say in case you don't know. Inevitably this is going to be a movie - and absolutely inevitably you know who will be playing the role of the trader - Dev Patel !
Enjoy the read!
Manipulated or not the markets appear to have decided the virus is no big deal anymore and they continue higher. (For how much longer?)
We'll discuss this at the follow up seminar on Wednesday (June 10th)- still small virtual space if you want to come. Also there is a spreadbetting virtual seminar on June 17th with appearances from high ups from spreadbet companies taking questions live. And a beginners/improvers session on June 24th. Mail me if interested in any of those and spend a day with me on Zoom !
The higher markets go the more likely it is a big crash is coming and it could well be just a matter of when. Because even if we are getting virus clear the damage to the economy has already been done and a lot of companies will go bust. Anecdotally - markets often go up when people think they should go down and down when people think they should go up, it is that contrary!
The last couple of days has seen an amazing rally as if the virus is done and dusted. Anyhow, I continue to follow the market trading wise but I am very wary about what to buy and continue to only be interested in companies with low debt or cash. A high risk strategy would be to buy airlines and holiday companies etc in the hope summer holidays are still on. Thing is, I can't imagine getting on a plane this year - if you think you would, buy the shares!
Recent trading has been super with some major gains across the portfolio. The real problem now is when to take the profits and how much to let them run up.
Usually a good idea is to sell a few after say 25% plus gains. Remember, current market bullishness can give way to fear again, just like that.
I've been stacking up with computer game sector - it seems to be hot! I bought a lot of Codemasters (LON:CDM). At the recent online seminars we kept comparing this to T17 and Frontier Dev, and this kept coming up as the cheapest.
So I have bought quite a few as they are very liquid and easy to buy and sell a lot. It's releasing a new Fast and Furious game in August and it has just announced a likely lucrative deal to produce FIA world rally championship games. And today it has announced Cars 3 will be available from August. I'd be targetting up to a fiver in time on these shares. To get a really good exposure to the sector I also bought a trust which has all the shares in the sector - the Vaneck Esports Gaming ETF. (ESGB)
This ETF holds shares in the FTSE 350 that are in the sector so gives a nice exposure to the whole thing.
A share that popping up on a lot of the share screens I used at the seminars wasD4T4. And it was highlighted also at the follow up online seminar. So we examined it a lot online and came to the conclusion it looked cheap. It wasn't going bust and it looked like in a good area of the market. Its Celebrus machine learning solution looks interesting and it has won three major contracts - looks like it has potential for a re-rating a lot higher.
Construction is not my area but the pick looks to be Morgan Sindall (LON:MGNS). I chatted about this one in the recent podcast, actually the first share I talk about I think so you should find me talking about it early on. To save me writing about it more here you will just have to find it on there, about 13 mins in - the link is here: https://soundcloud.com/thenakedtrader/radio-show-4
The problem with this one is volatility and I got in at the sell price using direct market access. There is plenty of risk but return could be high too. It has a massive cash pile though so unlikely to really tank more.
One of my favourite riskier stocks is ITV which I have been in and out of. I'd like to be in it because at some point it will be bid for by one of the giants. Just a question of when I feel, and the lower the share price the more likely!
Anyhow I have bought back in. I would like to stay in but as usual it is safety first for me, and would exit should markets turn ugly as it will follow the FTSE down.
I have bought some Stock Spirits (LON:STCK) which we examined at the last online seminar and I got some at the sell price using DMA. It has recently made a very bullish statement citing robust demand (fairly obvious people are drinking more!) and it has even been producing hand sanitiser. Already up a lot when I bought but they still look cheap after recent rises and I am targetting up and over 300.
I topped up on Elecosoft (LON:ELCO) - you can't ask more than the statement it came up with today. Despite the virus profit before tax was up 25% up to end of April and a decent few million in the bank of net cash.
Given it is a software provider the company said it managed to switch everything away from offices in just a couple of weeks so with a few more it remains a nice isa tuckaway for probably some time.
Volvere (LON:VLE) is a small one - the smallest I could ever go to because of liquidity. Bought some a while ago for the high risk sipp (those that get the email know about that one) but have added a few to the isa as well.
It's a turnaround and investment company so it should be doing well. It has swung into a profit and has cash - potential under the radar decent future!
Top ups: as you know I like averaging up, buying more of a winner and two of those - Concurrent Tech (CNC) which has been flying and old favourite Avon Rubber (LON:AVON) which only seems to bounce up!
Ab Dynamics (LON:ABDP) still looks a long-term winner and you can imagine it being double this price in 2-3 years given its car testing niche. After selling some Zoom, I bought back and despite how expensive
it looks the Americans just don't care - for now! I've shorted one of the fashionable virus shares Novacyt. (LON:NCYT) is not my area but this one now has a massive valuation and any question markets would see a massive de-rating. However it is a risky short no doubt and if you can get a guaranteed stop might be worth it in case!
Onto some sales. With markets rising some spreadbet shorts were closed out using trailing stops. As those of you who've come to or done virtual seminars with me know from seeing the spreadbet accounts I put stops into profits when poss and then scale down to let the market decide the final profit once in one. So as markets rose a lot of unemotional short profits were banked.
In one or two cases some profits were banked as there was more than one position. It means I'll never take a profit right at the best time but that is impossible anyway. It means I lock in part of a ride. EG the FTSE short was closed out with a decent profit. Anyhow, lots of shorts were auto closed as the markets shot up.
So, Easyjet profit was £1,560. AO World £1,150 - with the other banked profit on that total profit for that is £4,050. Half of Carnival went for a profit of £6,580 and Train for a profit of £2,500. Greggs went for a small profit after sticking stop into break evenish. RTN went for a profit of £3,480.
I'll be back in shorting shares once the market has definitely turned back down. What happens next? Who knows but beginners should be aware markets are much more of a gamble right now then it would appear. Caution all round!