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I try and not argue with the markets too much….

4

Thanks markets!!! I wrote most of the market report yesterday thinking get it done in advance instead of at the last minute as usual.I could then have a nice peaceful day today – a relax with the papers and a box set maybe? 

But the markets tanked so I knew I had to write it again. Then I realised my vat software hadn’t been picking up all the bank entries meaning I was about to massively underdeclare my vat return.

Cue long calls to the vat specialist and looking at weird spreadsheets. VAT return used to take me 30 mins. Now it takes hours, days with softwaresupposed to make it easy! 

I have spent most of the day trying to figure it all out. And now I have to write this in a rush or else emails start to come in. “Where is the update?” etc. What is going on? Supposed to be living the easy life!

So this is what I wrote early yesterday!

“I try and not argue with the markets too much which is just as well asif I was in charge they would be a whole lot lower!

But recently they have been pretty strong. Why the strength? No idea. Even if we look forwards things look in a right mess. Maybe it is share buying robots. Maybe Trump has a secret buying robot to keep the markets up till after the election.

Look, I really don’t know. Seriously if I really was setting prices, I’d rank the FTSE at 4,000. And the Dow a lot lower.

But I don’t, so I have to go with the collective – while they are still acting crazy, I am going with it…a bit. But it seems bonkers.

But. I’ve made sure I don’t have too much of anything so I can exit quickly and easily should things worsen. 

A move back to fear could happen pretty quickly in which case I’d be topslicing, selling and going short of the indices.Any one mention of the virus getting worse/getting better sends the market soaring or crashing so be careful and keep lots of cash on furlough! In summary: it is all a bit of a gamble for now. “

Ok, so the above I wrote yesterday.. today the market has tumbled all day long!

That’s the trouble with markets, they really are barking bonkers. I blame the US markets which everyone else follows – they are really nuts. 

In the spirit of thinking we should be lower I did add more to the original FTSE short at 6115 ish that I mentioned last time and shorted some again yesterday and more this morning.It acts as a nice cover should recent buys suddenly tank and it is a struggle to sell.

I continue to use   https://www.spreadco.com/nakedtrader for its 0.8 spread on the FTSE which is very cheap and its 2pc monthly interest payments on 20k free cash.One thing that stuck me this morning was the massive spreads at the start of play as market participants seem too shy to put prices in.

Also even during the day on the more illiquid mid caps it just takes some small trades to make shares plunge, then often they go back up. 

What this means is if you are using stops they really have to be miles away from the price as insurance or else you will get stopped out every time by a wide spread.

And any buying during volatility means you have to decide whether you are buying low and sticking with it or else getting out quick. Beginners should be ever so careful right now and a cash pile is a must!

I am cautious but for now continuing with the odd bit of buying when something looks really tempting. And shorting where things look like they have more downside. 

Probably in reality if you have a large portfolio you are probably going to do well to keep it steady and not make losses!

Perhaps going where angels fear to tread, I bought some of drugs company Vectura. (LON:VEC)

Its recent results were pretty impressive and ahead of expectations. Its share price has hit 100p recently and a good chance it will do that again.

But also, there are chances it could crack the 100p and head higher as there are some potential catalysts. These include potential approvals for some of its respiratory drugs, as it tries to become the top company in the respiratory area.

Backed by some decent cash too, looks a solid play for an isa.

Of course in current crazy times I’d have to be out if the whole market tanks – but it could possibly even be a defensive?

FRP Advisory (FRP) we discussed at the last two online seminars and this one
is also discussed on the podcast – I discuss FRP in depth roughly half way through the podcast so have a listen! The podcast link is here: https://soundcloud.com/thenakedtrader/radio-show-4 FRP could be in a sweet spot viruswise as it helps companies that need
to turn around and deals in insolvencies.

Since I recorded the podcast, FRP has come up with a very decent trading statement with revenues and profits ahead of expectations. More background on the podcast.

Another discussed on NT Radio show 4 is a surprise to me as I rarely ever buy retail shares as I am convinced retail is “doomed” (thanks Private Fraser) But I have dipped in for some Kingfisher. (KGF)

The debt as with a lot of retailers is high but not so high I think it will go under and it has decent net assets. It goes under B and Q and Screwfix and lots of other outlets and
you might know this week people are flooding to garden centres. It looks like there is a lot of demand especially for home improvement products so I reckon there could be a nice bounceback here.

For more of my thoughts on Kingfisher, hear them on the NT4 show. I have shorted (bet on the share price to fall) Hotel Chocolat shares. (HOTC) How could I when I like chocolate? Well, the price sits on a massive multiple. It just looks way too high and I reckon something like 30pc off would be about right.

It’s not a bad company – it makes decent profits and its products look nice though not to my taste as I like crap choc. But a PE of over 40? Bonkers.

Stockopedia agrees – it rates it just 11/100 for value. But a good rating for quality – all agreed! Good quality, just too high. I hate to argue with the market but surely there is 100p to come off here?

I found it quite hard to find a spreadbet firm to take on a short but got mine on with spreadex.com/nakedtrader.

I have also shorted Greggs. (Bet on it to go down). (GRG) And I like sausage rolls, I mean who doesn’t? Oh yes vegetarians. Forgot! (Come on the Veggie ones are vile and just look up what is in them..)

No doubt Greggs is a great company and well run. Problem is social  distancing – and where its stores are positioned. Generally they are tiny – this is going to make it hard to serve as many customers and indeed how are the staff to stay apart? Also, a lot of branches are in transport hubs – there is going to be a lot less footfall around as people are avoiding these areas.

For now, looks too high – but probably later this year will bounce back but hopefully out of the short by then! Banked some bits and pieces of profit. Remember you don’t have to sell
all of something, you can sell some, or half and run the rest.

 QQ has gone for a reasonable profit and I topsliced some rfx as it stormed up. It has come back a bit now and am looking to buy back the topslice. CCC had a good run and banked profits on that one. Also topsliced one or two today on the rundown inc knos. Have stayed with all the shorts for now.

I am out of time for profit/loss working out thanks to the vat debacle as it takes ages but the webmaster will update the website table in the next few days (he is on the lazy side but is a kind of friend so I can’t hassle him). I’ll work it all out tomorrow when I get some time at last
and send it over to him to update. Elsewhere recent shorts are going well including Easyjet and Carnival which has racked up some giant profits.

Where the hell is all this going? I wish I could tell you but with all the virus up and down uncertainty, it could simply be it is time to chill out and maybe just not get too involved and 
keep a decent cash pile for when things are clearer. I think we can expect massive updays and downdays and expect  sudden big losses if you are on the wrong side.

Chasing ups and downs is fraught with danger – as well as very tiring and time consuming!

If in doubt don’t put money in. Indeed if you can’t afford to lose half of what you put in, you really should not be in. 

Right can I just be left alone now to have some tea and toast till I have to get back to working out where the missing bank lines are for the bastard vat?

 

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