May 2013: Following Woodford update

Hmm, well the 3 picks continues to make a charge and has now recorded a 17.39% increase since the beginning of the experiment. 
Still not enough to take it off the bottom spot as the Edinburgh Investment Trust is still showing a 20.57% increase.
But, the flagship High Income Fund managed by Neil Woodford remains out in front with a 23.07% increase.

Dividends came into the Investment Trust and the 3 picks, the latter receiving its dividend directly from British American Tobacco.
All 3 elements of the "picks" have stepped up lately with BT in particular being boosted by reception of its new marketing plans involving free issue of its quota of Premier League games with Broadband packages.
But it has also been a long time since Glaxo was last at £17, and BAT is continuing its long term rising trend.

As at the end of April, the 3 picks occupied 19.56% of the High Income Fund and maintained a position within the Funds top 10 holdings (http://www.invescoperpetual.co.uk: Invesco Perpetual High Income Fund).

			Shares	31.05.13
Inv. Perp. High Income			1110.14	6.65	7384.13	23.07%
	Residue				0.00
	Dividends
	Total		6000		7384.13	23.07%
Edinburgh Investment Trust			1182.00	5.85	6914.70	15.25%
	Residue				0.43
	Dividends				319.14
	Total		6000		7234.27	20.57%
3 Picks
BAT			61.00	36.23	2210.03	10.50%
Glaxo			138.00	17.14	2364.63	18.23%
BT			788.00	3.02	2380.55	8.57%
	Residue				0.00
	Dividends				87.96
	Total		6000		7043.17	17.39%
Transactions in the month:
Invesco Perp. High Income			N/A
Edinburgh Inv. Trust
Edinburgh Inv. Trust			23/05/2013	Div	59.1
3 Picks
	BAT		08/05/2013	Div	56.55

Click to enlarge, close to return.

Related post links:

- April 2013: following Woodford update.

- March 2013: "following Woodford" update.

- February 2013: "following Woodford" update.

- January 2013: "following Woodford" update.

- http://www.invescoperpetual.co.uk: Invesco Perpetual High Income Fund

Note: Unlike my Portfolio updates (Portfolio Updates.) which reflects an actual investment portfolio, "following" Woodford is an experimental strategy and a virtual portfolio.

Back from my trip!

Well I have to apologise for the scarcity of posting in February with just the 2 portfolio updates being published. 
I've actually been away for most of February and purposely didn't take a Laptop so as to maintain some distance and recharge my batteries post christmas.

Fortunately it looks like my portfolio has managed itself and probably recovered the temporary outperformance that the FTSE managed over it in January.

It looks like Rolls-Royce, National Grid and William Hill have been the drivers for this outperformance.

Anyway, I'm back now having had a bit of Winter sun and a great time in South Africa!
And, am once again looking at the monthly portfolio updates that should confirm a good start to the year, and long may it continue!

Information overload on Apple!

More an observation and warning sign than anything else but, following my trawl for information at the end of 2012, I subscribed (probably on New Years Eve), to an e-mail alert service specifically for news flow on Apple.
But, whilst the news flow is constant and seemingly from informed sources, it is already driving me nuts.

Working on the basis that most private investors are constantly battling the paranoia that someone else always knows more, and sooner than we do. It would also appear that the constant flow of information makes it all too easy to create a picture that either supports or undermines one's personal view.
Which raises the risk of a potentially hair triggered response to the next piece of speculation.

The easy, mechanical access to information, coupled with the near instant access from always online platforms, really does increase the potential for information overload that can supplant your own thoughts and undermine your confidence.
For me at least, I can see that it becomes very difficult to separate factual argument from speculative opinion which, with little time to consider and filter it all (before the next piece comes along), begins to garner a dependency to this instant fix of information (and perceived to be better knowledge), which leaves little room for your own thoughts.
But if we are unable to separate fact from speculation in this spoon fed environment, then it can prove a challenge not to doubt yourself and your own thoughts. 
Meanwhile, there is the swelling illusion that you are in a privileged position to react to what you begin to believe is time sensitive information even if it overrides your personal view i.e. sell before anybody else does.

This potentially unthinking dependency, and any immediate response, is the exact polar opposite approach to the one I have tried to take by investing on a longer term horizon. 

It also re-enforces my questioning of personal objectives and gains from the constant slew of speculative opinion, with each seeming to be more ground breaking than the last in an attempt to be heard.

So having worked hard to adopt this long term approach, this really is something that I need to keep an eye on in order to avoid it affecting my decisions by prompting a potentially damaging sell response to "Defcon 1".

It brings to mind the final scenes of the film Crimson Tide where the crew of a damaged nuclear submarine is cut-off from central command communications in the midst of a "situation". 
The crew ultimately splits into 2 led factions attempting to take control in order to enforce their view of the situation. 
One side wants to react to the last piece of information received (despite it being incomplete), by firing off a what it thinks to be a retaliatory nuclear response, but the second group wants to wait (for fear of it being pre-emptive and potentially self-destructive), whilst communication is restored in order to get a clearer picture of the situation.
Press the button or hold fire then.
I won't tell you how the film ends but, to my mind, the "chain of command" is very much the information dependency in this situation and the cut-off communication creates the paranoia (someone knows more), to the point where a worst case scenario picture is created by speculating on the gaps in the last partial piece of information.

In the context of this post, it also doesn't help that the information is very narrow and specific to one company so you are not being balanced, and re-energised, by opinions and views on other companies/sectors etc.
At the end of the day performance is also relative so it seems right to need diversification in information as well.

So after only a few days of this mental battering, I am already debating the merits of unsubscribing but will probably persevere now that I have recognized the issue and can turn things down a notch to Defcon 2.

Gummy bear beats up Lindt bear in German court!

"It is a case of mistaken identity that has been occupying some of the finest legal brains in Europe. In the dock was an innocent looking chocolate teddy bear in a gold jacket which always turned up in court wearing a ribbon with a little heart charm round its neck and a big smile."

"Looking on was a pack of gummy bears – less than 2cm tall and all wearing the same blank expression."

"In the autumn German confectioner Haribo launched legal action accusing Swiss chocolatier Lindt & Sprüngli of copying its trademark on the Gold Bear name after it launched the gold foil-wrapped Lindt Teddy. Haribo, which invented gummy bears almost a century ago, said the two products would confuse shoppers – even though one is a jelly sweet and the other chocolate." (http://www.guardian.co.uk: Gummy bear wins court battle).

Had a proper chuckle at this article which popped up in the news feed (above), on my blog. The writer has done a good job of creating the image of an innocent and sweetly smiling Lindt bear being accused by a "pack" of Gummy bears on their home turf.

Its not quite Apple v. Samsung (and the rest of the Android horde), but goes some way to illustrate that companies in all sectors will seek to protect themselves from so called imitators although, in this case, I have to admit to not ever having confused, or connected the Lindt gold foil wrapped chocolate bear with Gummy bears.

Still, must be an emotive subject for someone at Haribo!

Related article:
- http://www.guardian.co.uk: Gummy bear wins court battle

The Bank of England: There's a new Sheriff in town!

There's a new Sheriff coming to town.

So says George Osborne, the UK's Chancellor of the Exchequer, who named Mark Carney as the next Governor of the Bank of England come June 2013 when the current Governor steps down.
A step into the unknown perhaps, with an outside appointment as opposed to the typical internal succession, but it can't come soon enough for me given the patchy track record of the current Governor with his one tool fits all approach. 
A Manchester Screwdriver perhaps?

In addition there is the BoE's questionable culture and capability that has recently been highlighted in the publication of 3 independent reviews commissioned by the BoE.  
Summary news reports gleefully picked out that the Bank's governance was deemed "defective" and that its  forecasting abilities have even deteriorated since the crisis providing less accuracy than external forecasts (http://www.bbc.co.uk: Bank of England governance 'defective').

An assessment of the situation by Andrew Tyrie - Treasury Select Committee, was that the reviews and the BoE's commissioning of them was too little too late:

"The decision to commission these reviews fell well short of what was required," 

"A comprehensive review should already have taken place, not just to enable the Bank to learn from its past mistakes but also to inform the legislation currently before Parliament.

"The fact that it took so long to obtain even these reports illustrates the Bank's defective governance." (http://www.bbc.co.uk: Bank of England governance 'defective').

Following publication of the reviews, the Independent ('Autocratic management' at Bank of England under fire), reported one "former bank economist" as saying: 

"The process within the Bank was one of second-guessing what your superiors and specifically Mervyn King would like you to think about a certain subject before offering your opinion on it."

"Agreeing with the Governor was the route to advancement."

"It's all a bit pointless if you are just going to reflect back what somebody already thinks."

"There were a lot of people at the Bank being paid vast amounts of money to hold a mirror up to Mervyn."

Statements which also appear consistent with those taken from the report completed by former JP Morgan joint chief executive, Bill Winters, who warned that there:
"appears to be some tendency for them to filter recommendations in such a way as to maximise the likelihood that senior staff will find the recommendation palatable".('Autocratic management' at Bank of England under fire).

Coming back to forecasting accuracy though, it is interesting to read extracts from the report by former Federal Reserve statistics director David Stockton which:
 "raised doubts over the MPC's "overly optimistic" recovery predictions. 
The committee had made "somewhat larger forecast errors for growth" than the average of external forecasters, and failed to apply "systematic, detailed quantitative analysis" to explain its errors, ('Autocratic management' at Bank of England under fire)

Not pretty reading at all and a root and branch improvement seems long overdue.

So who is Mark Carney?
I've not looked too deeply into his track record but "the 2012 Central Bank Governor of the Year" (Euromoney magazine), is highly rated given his documented role in helping to steer the Canadian economy through the crisis. 
A journey which has seen the Canadian economy outperform its G7 peers to become "the first G7 nation to have both its GDP and employment recover to pre-crisis levels" (http://en.wikipedia.org/wiki/Mark_Carney).

Recovering to pre-crisis levels sounds to me to be a pretty significant achievement. 
But it would be an even greater achievement if he could repeat the feat as the Governor of the Bank of England!

A brave (possibly), but seemingly sensible appointment that might just be the best Christmas present the UK could hope for.
But its a shame we can't unwrap it until June next year.

Related article links:
- http://www.bbc.co.uk: Bank of England governance 'defective'
- http://www.independent.co.uk: 'Autocratic management' at Bank of England under fire
- http://en.wikipedia.org/wiki/Mark_Carney
- http://www.cbc.ca: Bank of Canada's Mark Carney

Musings: FTSE rise, recent falls and fiscal cliffs.

FTSE100 @ 5662.25, +56.66 (1.07%)

Not sure what to make of this morning's bounce on the FTSE other than to say it throws another spanner at my efforts to add to my portfolio by making a seemingly cheap price "slightly" less cheap. This will have very little bearing on the long term but: cake, having, and eating comes to mind! 
Although, to be fair selecting is also turning into a chore as more and more candidates drop into an attractive price range albeit with their own dark webs of future forecasts being spun by analysts.
Is there no end to the economic gloom!

But at least it looks like their might be some logic to the recent sell-off in the US (which doesn't suggest others should lamely follow though), and that is the stock market related implications stemming from the unwinding of the Bush era tax cuts in yet another legacy of self interest which has long since been capitalised on. 
The most interesting ones (or not as the case may be), being an increase to Capital Gains Tax and Dividend Tax (or withholding tax in my portfolio's case).

With the uncertainty over Capital Gains Tax rates, market reporters seem to be hinting tentatively that a proportion of the recent sell-off might actually be a case of locking in profits ahead of any as yet unconfirmed increases to the rate of CGT.
Actually seems logical.

This thinking also seems to have been applied to Apple, given its meteoric rise, as a partial explanation for some of the continued recent falls ie. locking in profits.

Is now the right time to buy, who knows. No one I know anyway.
But at least you would be buying in the knowledge that most stocks are cheaper than they have been in the last few months, some comfortably so.
So on that basis I still think it very likely that I will make an addition or top up to my portfolio soon. 
My biggest problems will be indecision and not having enough funds to buy everything I want to.

As things stand currently, November is looking like being a very disappointing month for my portfolio with current falls in excess of 2% from October's close.
But at least the dividends are continuing to roll in with GE (finally), Morrison's, Centrica, and Aviva having coughed up so far this month, and Apple and BAe still to come.
In addition, Apple, BP, Microsoft, National Grid, and Vodafone, have gone, or are due to trade ex-dividend this month. 
Which basically means that I now have visibility of my next invest-able size tranche of funds.

Ex Div.	Company and payout	Due date
19-Sep	Aviva @ 10p per share	16-Nov
19-Sep	IG Group @ 16.75p per share	23-Oct
20-Sep	GE @ 17c per share	25-Oct
26-Sep	Morrison @ 3.49p per share	05-Nov
26-Sep	Centrica @ 4.62p per share	14-Nov
10-Oct	Tesco @ 4.63p per share	21-Dec.
17-Oct	BAE @ 7.8p per share	30-Nov
24-Oct	R-R @ 7.6p per share	04-Jan.
24-Oct 07-Nov 07-Nov	William Hill @ 3.4p per share Apple @ $2.65 per share BP @ 9c per share	07-Dec. 15-Nov 21-Dec
13-Nov 21 Nov	Microsoft 23c per share Vodafone @ 3.27p per share	13-Dec 06 Feb
28 Nov	Nat. Grid @ 14.49p per share	16 Jan

Roll up, roll up for the Magical Dividend Tour!

Related post links:
- October 2012: Portfolio Update (The Long Haul).

Markets move up! Markets move down?

Markets (and myself), took a bit of a proverbial, and psychological, towelling last week, amidst concerns about lemmings and fiscal cliffs, trojan horses, and alphabet soup (EU GDP).

And whilst these are genuine concerns, from which you can suggest that they are rightly being accounted for, none of them are new, and questions the sense of logic that prompted markets to rise in the first place before coming back down, and then some. 
Strangely, markets started to move ahead as the uncertainty surrounding the next President of the United States of America, appeared to lessen as polls pointed towards the incumbent Barack Obama. 

As recently as election day itself the DJIA was moving up with such as United Technologies driving them (U.S. Stocks Stage Election Day Rally; DJIA Notches Triple-Digit Gain!).
And I've purposely picked United Technologies, which rose 2.7% on election day, because as a large US employer, and a conglomerate who's interests include defence, it surely wouldn't be affected by tax rises and cuts in "defence" spending would it?

Forearmed with this knowledge, and putting European woes aside for a minute, why then did markets drop dramatically once the uncertainty became a certainty as President Barack Obama made his victory tweet and returned to the Whitehouse.
Almost upon the last letter of his historic tweet (1 million retweets), US index futures were indicating the probability of a 100 point fall in the DJIA as speculator attention moved once again to the impending fiscal cliff of tax rises and spending cuts in January.

100 points up, and a 100 points down.

None of this is breaking news though. 
But if markets hadn't moved up then it would not have seemed such a dramatic fall which once again raises the question of short term market moves and who benefits.
For a small private investor such as myself it can drive you mad and is probably the biggest barrier to anyone thinking of investing in shares as it creates such a dramatic image of risk.

As to European GDP figures, shhh, its a secret but did you know there has been a recession and rising unemployment in Europe which might lead to lower output!
Ah, so you did know, I bet you didn't know that Greece has problems though and, despite agreeing to tax rises and budget cuts, can't seem to implement them all.

There does not seem to be the will in Greek leadership to turn the country around whilst it is being spoon-fed and trained by the EU.
Greece really needs to be left alone to fix itself as that is the only way by which they will accept the unpalatable decisions and support them.
I wonder when the case will be heard in the European Court of Human Rights that Greece is being put upon by its northern neighbours?

My Portfolio seems to be full of potential bad news at the moment as well, with Apple dropping amidst speculated supply chain constraints (its struggling to meet pent up demand!!!), and future dividend concerns across National Grid, Vodafone, and Aviva. 
The latter, which I was concerned to read about in the Telegraph's Questor column (Sunday share tips: Aviva, Staffline, G4S), where the columnist reports that analysts expect a cut next year. Funny that this has not filtered through into consensus forecasts yet? 
Some analysts do then and some don't, hence the consensus, or average.
But, worryingly there is a change of language here, despite the Chairman seeming to understand its importance to shareholders and suggesting it would be a last resort if the steps identified to shore up the company's capital position don't come to fruition.
I wonder how much is speculated and how much is leaked to give shareholders time to acclimatize themselves to expecting a cut?
More uncertainty then.

And, apparently we are no longer shopping at Morrison and Tesco's either, and BG Group can't get at its gas yet. 
On BG Group, it is annoying that, according to internet sources, on the 7th September, the COO Martin Houston apparently sold 56,034 shares at 1269.07p, raising £711,111.25 ahead of the hastily brought forward Halloween statement that prompted a 20% fall in the share price.
Of course, as the Chief Operating Officer and an Executive Director, he would not have any foreknowledge of business performance or production delays, would he? 
I'd like to think it's just a co-incidence.

On the subject of supermarkets though, why don't they stop giving us piles of paper to carry around and just cut the prices in store? 
Morrison's also need to stop trying to catch the ship, its sailed. 
The niche for Morrison's label clothing must be small. The stores aren't large enough so it must surely cost more to set-up and market than it will realise anytime soon.
Its a worry when new management teams come in and want to make a mark by spending the family silver.
Find me a supermarket whose mission statement is "to sell good quality groceries at the right price in an attractive environment (with car parking spaces large enough that my car doors won't keep getting bashed)".
The last bit is me being grumpy but is still a factor in where I choose to shop.

But Morrison's have finally taken the one step forward, to keep pace with rivals, that they should have taken years ago though, and thats to extend their opening hours.

Anyway, I've caught a cold in more ways than one so you might be able to tell that I am feeling a bit grumpier than usual.
And that being the case I will sign off now.


Related article links:
- http://online.wsj.com: U.S. Stocks Stage Election Day Rally; DJIA Notches Triple-Digit Gain
- http://www.sharecast.com: Sunday share tips: Aviva, Staffline, G4S

Nervous markets react to earnings misses.

FTSE100 @ 5804.78, +6.87 (+0.1%)
DJIA @ 13120.59,+18.06 (+0.1%)

Markets certainly testing nerves at the moment but despite what has felt like a painful few days with a 3%, or so, hit to my portfolio the FTSE continues to be above/around 5800 and the Dow Jones is currently above 13000 so the impact on the indices still appears negligible.

Surprise, surprise that Europe is back on the agenda and the forthcoming US fiscal cliff is in focus as the Presidential election moves towards a conclusion.

The icing on the cake (despite weeks of warnings), is that company earnings have disappointed with a number of US heavyweights not meeting all aspects of analysts expectations the biggest disappointment of which came from Google (Google "groan" (not Chrome), as shares suspended on trading update.), which, unfortunately was the centrepiece of a debacle involving the early release of information without the benefit of company support.
This foot shooting miss and  early release triggered an almost immediate 10% fall in the share price followed by suspension.

Circling in the shadows is the 25 year old spectre of Black Monday with journalists earning their crust by wheeling out the many similarities (if you really want to dig for them, of course), with today's market environment. 
I did learn something new though as I didn't realise that, back in 1987 over the weekend that preceeded Black Monday, US warships shelled an Iranian oil platform which certainly wouldn't have helped frayed nerves.

Back to today though, and it might be that markets calibrate themselves further but I am not looking to react to it. Being cynical in my old age I still think that there are many interested parties who actively seek the trading opportunities that this volatility and nervousness can create.

The very active ex dividend and payment dates affecting my portfolio (September 2012: Portfolio Update.), also helps to give me a sense that it is still moving forward despite the market noise. 
Tesco and BAE have gone ex. div. already this month, IG paid out yesterday, R-R and William Hill went ex. dividend today, and GE payout tomorrow.
Thats a couple of payouts this month and 3 more ex.divs added to the "pipeline".

So patience, and finger crossing on my part that the steady rewards will continue.

Related post links:
- Google "groan" (not Chrome), as shares suspended on trading update.
- September 2012: Portfolio Update.

Shareholders' rights going missing?

Interesting to see the weight of opinion rising against the BAE EADS with Invesco Perpetual's Neil Woodford the latest to voice concerns as a BAE shareholder (http://www.citywire.co.uk: Invesco's Woodford hits out at BAE-EADS merger).

Elsewhere on the Citywire forums the subject of shareholders rights has been raised once again particularly voting rights which could come into play in takeover and merger situations such as these.
It appears that over the years shareholders have been incentivised down the nominee account route without full realisation as to the loss of rights/benefits that go with this.
This can simply be shareholder benefits and discounts as offered by a company but also stretches to access to dividend re-investment programs and in this case individual voting rights (http://moneyforums.citywire.co.uk: Investors ‘unable to vote on BAE merger plans’).

Concerning and as the forums suggest time for the FSA and Government (yes you Vince!), to step up to the mark and enforce our rights.

Related article links:
- http://www.citywire.co.uk: Invesco's Woodford hits out at BAE-EADS merger
- http://www.dailymail.co.uk: Intervention from major shareholder Invesco Perpetual drives BAE-EADS deal closer to the rocks
- http://moneyforums.citywire.co.uk: Investors ‘unable to vote on BAE merger plans’

Related posts:
- BAE takes off on proposed merger with EADS!
- Part 2: BAE takes off on proposed merger with EADS!

FTSE 100 @ 5841.79, -51.73 (-0.88%)

I see I spoke too soon about markets recovering but, as suggested in a previous post (Jam today, not tomorrow (or at least twice a year anyway).), it already looks like there is a partial retreat, from growth and cyclical sectors, and a tentative dip of the toes back into the relative safe havens of those sectors seen as defensive, with utilities, pharmas, consumables, and tobacco holding against the tide.

Funny that, despite not liking uncertainty, it does seem that there are market participants that desire a certain volatility which is frequently provided by media.
Perhaps that is the difference in this case i.e the uncertainty provided by politicians and central bankers, as opposed to the less tangible hype provided by news agencies.
One can (in theory at least), have a tangible effect on the conditions and environment in which markets operate, whereas the other is more rhetorical and provides an emotional roller coaster for an audience and the more vulnerable section of private investors (whose behaviour might then provide a predictable volatility for better backed traders to capitalise on).

Anyway back to the trenches.

Jam today, not tomorrow (or at least twice a year anyway).

Bit of a mixed bag of things going on at the moment which I am guessing is down to a bit of a "risk-off" psychology following Mario Draghi's ECB announcement last week (Super Mario powers up the markets with bond purchase program!), which provided an instant pick me up to the FTSE and the rest of global markets.
This has subsequently led to a slew of articles suggesting the start of a new bull market and asking if the time is now right to exit equity income shares.

Conversely to all this is todays "risk on" situation with markets retreating ahead of the German parliamentary vote on the constitutional legality of the ECB's proposals.

It sort of feels that topically current articles such as these are tapping into the current psyche of markets, and investors, whilst targeting and acting as confirmation for many investors that this really could be the case.
Looking around I can see a number of perceived defensive shares retreat just as other shares perceived to be more geared to bull markets enjoy a trading session or two in the sun.

The combination of a few planted seeds of doubt (BAT's, National Grid etc), and articles creating a sense of missing out seems to be enough to push a number of shares into the shadows whilst investors swing back into banking, mining etc.

As it stands I think that its too early to understand if things have bottomed out but as with the markets themselves, rotating and pivoting around the average, diversification is an important consideration in any portfolio.
What do I mean, well a headline index such as the FTSE is effectively an aggregated measure of the averaged performance of the companies that make up the index and at any one time a proportion will perform above the average, some might be on the average, and a number will underperform the average as sentiment, support and investment leaves some and migrates to others.
So it could be said that the FTSE indices themselves reflect the averaged performance of a diversified sample of companies.
The current valuation of a portfolio acts in the same manner by reflecting the averaged underlying performance of each investment.

It would be wonderful, and wildly optimistic, if one could select the single share that will outperform all others and put all of one's funds into that. 
I for one am not clever enough or have the appetite for that level of risk (not anymore at least).

But back to the question at hand, am I going to start bailing so called income shares for the apparently impending bull market. 
No is the short answer, as I believe that they continue to have their place in the diversification and strategy of any portfolio. And, you can almost guarantee that as investors rotate out of them today, many will rotate back into them tomorrow, following any change in sentiment again that might knock confidence.

I'm not even sure that I could narrowly class them as just income shares, rather that they have mature proven business plans, strong cashflows, and are certainly more focussed on shareholder returns than others which is a massive plus for me these days. 
They might have a lower level of growth than some, but many also have lower annual investment needs and strong defendable market positions, so are sharing profits and returning capital to investors on a regular basis rather than giving speculatively inflated promises of jam tomorrow (whilst taking out rapidly inflating salaries, bonuses etc. etc. in the meantime).

Significantly though, in many cases, sustainable growing dividends are also inextricably linked to a company's steadily growing cashflows. And, just as often, a strong balance sheet enables these company's to continue paying dividends even should profits "blip" for a year or so.

Jam today, not tomorrow (or at least twice a year anyway)!

Also recognising that I am neither clever enough, lucky enough, or have the risk appetite these days, I can't see that I will ever "get in first" on a share as the herd migrates. 
But with a little patience I might still be in an investment when the herd migrates back effectively creating a pseudo first in opportunity as a company comes back into fashion/requirement.

I am also more and more convinced that whatever the trends, sentiments, and support for companies/sectors/markets might be currently, they do little more than provide short term changes in direction and/or volatility. 
But even these horizons or situations just lead into the next one, and the next one, and the one after that.
And once connected these short term periods create a larger one and much like plotting time phased points on a graph there will be an overall trend be it upwards, downwards or sideways.

For me there is also a danger to be recognised that, with financial markets these days seeming to be dominated by a short term "trading" mentality (supported by the speed of light immediacy of information and trading systems), this can often give rise to overwhelming hair triggered emotions of fear, and greed, which can cloud logical decision making.

For myself then, and my philosophy, I am trying to concentrate on a longer horizon (or at least longer than some of these short term periods of volatility), with a hoped for upward trend hidden within the short term ups and downs that traders, and computers require to make small margins over and over again.

You can't see the woods for the trees and you can't see the trends for the ups and downs!

After all it seems at times that some analysts recommendations (typically sells) are geared for periods of 3 months or less as by the time they are published the targeted shares have already hit a support and seem ready to start recovering again which creates the happy coincidence (for someone), of small, private (and less privileged), investors such as myself selling into willing buyers before the shares fully recover in time for the next buy recommendation.

As I have mentioned before, it seems that between journalists, analysts, traders, and media, everyone has a vested interest in what they are saying or doing (as, of course, do I).
The journalist wants to sell articles and create a readership (sell advertising), the analyst wants to sell and create a dependency from clients (commissions), traders want to make money from volatility, and news channels hook viewers by creating drama and headlines e.g dum, dum, dum - "FTSE registers triple digit fall today" goes the headline (actually less than 2% though).

So everyone has a vested interest and motive but it is good to ask yourself what this is. 
Is it the same as your own, and that being answered, you have a better chance of understanding if the information provided affects the overall trend of an investment across the horizon that you have chosen to invest over. 
In that way you can still move from point A to point D (in your horizon), whilst hopefully being able to ignore what might be happening at B and C (as long as it doesn't fundamentally change the prospects of the company, of course). 
After all A to D is your horizon and should hopefully provide the overall trend that you, as an investor have invested in, be it in a single company, a sector, or the markets as a whole. 
B and C then become background noise and incidental volatility.

If anything taking a contrarian view again, this vested interest or "fashion" seeking exit of certain shares and sectors is what effectively creates renewed buying opportunities in much the same way that recent falls in mining and financials created a buying opportunity there just prior to this recent bounce and flirtation with recovery. 

So the pendulum swings both ways thereby creating short term volatility and buying opportunities in all companies.
But you do need to pick and understand the investments that suit your goals, psychology, and realistic attitude to risk. 
Definitely understand your personal horizons, and try not be over influenced by everything that is being thrown at you to tempt, and scare. you from your chosen path.

Finally, coming back to equity income (or dividends), these can at least help breed patience.
But if you are focussed on capital gains then a friend of mine came up with the interesting viewpoint that, you can discount your original purchase price by any dividends received (they are a return of capital after all).

More and more this seems to be my philosophy anyway.

Wish me luck.

Related posts:
- Super Mario powers up the markets with bond purchase program!

Gadgets and Gizmo's expected soon: iPhone 5 etc.

Interesting line up on CNN of the 7 best gadgets and gizmos coming this fall. 
Article leads with iPhone 5 and iPad Mini but others as well.

Elsewhere rumours suggest that iPhone 5 will be announced on Sept 12 to hit the stores 9 days later. 

Related article links:
- http://money.cnn.com: 7 best gadgets and gizmos coming this fall

Norwich & Peterborough Gold Current Account and Holiday currency.

OK so slightly different today as I am thinking of my holidays, and how best to access currency in the current climate. 

I've long lamented Nationwide's decision to pull back into the pack of mediocrity with its decision to end the one differentiating benefit to its current account holders and indeed, to its position amongst high street banks and building societies.
What was the benefit you ask? 
Well, Nationwide's current account, the Flex Account previously enabled holders to withdraw cash in the local currency out of an ATM anywhere in the world with no withdrawal fee from Nationwide (ATM provider may charge), no currency handling charge and at the wholesale exchange rate (rather than the tourist).
For me at least, this made it a must have product for travellers along with their credit card which operated in a similarly charge free fashion when used for payment and settled at the end of the month (cash withdrawals incurred a more normal charge and interest etc etc.).

However, Nationwide now applies various rates and charges. For example debit card withdrawals incur a £1 ATM charge and a 2% exchange load.

In its place the Nationwide now offers European travel insurance to Flex Account holders that meet certain conditions. 
Like I said mediocre offerings then, from a Building Society that spends a lot of money telling you its different, and the benefits of mutuality, but ditched its one differentiating product.
No wonder shareholder members are looking at Director's generous remunerations and asking what they are doing to deserve them!

But following up on my weekly email from Moneysaving expert it looks like there might be a viable alternative on the market from Norwich and Peterborough BS, which is now merged with the Yorkshire BS.
The product in question is the society's Gold Classic Current Account which offers free card usage abroad to qualifying account holders (allowing for any local ATM operator charges of course).
To qualify requires a minimum £500 a month to be paid into the account which qualifies the holder for all overseas debit card transactions (payments and withdrawals), to be free of Norwich and Peterborough charges.
Interestingly there are also other attractive benefits like card and key protection, and cheap share dealing!
Nationwide et al please take note!

From experience being armed with a good credit and debit card for overseas spending is a very satisfying start (and one less stress), to any trip, so it looks well worth a look to me.

Related article links:
- http://www.moneysavingexpert.com: Cheap Travel Money
- http://www.nandp.co.uk: GOLD CLASSIC CURRENT ACCOUNT
- http://www.nandp.co.uk: HOW DO WE COMPARE?
- http://www.moneysavingexpert.com: WANT THE FAMOUS MARTIN'S MONEY TIPS E-MAIL?

George Soros swimming against the tide!

Intriguing to see that the Daily Telegraph reports that the legendary George Soros has bought a stake in Manchester United with no dividend and practically no voting rights.
The paper reports that the 3,114,588 shares purchases amount to a 7.85% stake in the second coming/newly floated club.

Interestingly in the same article the paper also reports that Soros purchased 341,000 shares in Facebook last week which seems very much against the tide and wave of selling.

Is there a lesson there for us wannabe's with Buffett, Munger, and Soros, all in their 80's? 
Is it the case that their life experience means that they really have seen it all before (any number of times) and learnt the lessons.

I only hope I can learn a smidgeon of it before I get to my 80's.

Added:
I didn't just think it all added up and it appears that 7.85% is a reference to the proportion of A shares bought which appears to equate to a near 1.9% stake as reported elsewhere (http://www.bbc.co.uk: Manchester United: George Soros invests in football club). Confusing to say the least!



Related article link:
- http://www.telegraph.co.uk: George Soros takes 7.85pc stake in Manchester United
- http://www.bbc.co.uk: Manchester United: George Soros invests in football club

Apple rumours: share splits and DJIA inclusion.

Interesting article here: seekingalpha.com: The Apple Stock Split And Its Effect On The DJIA, discussing the rumours, merits and possible effects of a share split on Apple and its inclusion in the DJIA.
Interesting also to see the difference between a price weighted index as opposed to a market capitalision weighted index.

Not sure I understand what can be read out of a price weighted index other than momentum in a share price.
It might also hint (extremely broadly) at number of shares in issues relative to its peers.

But I can see little else as share prices in themselves are not, in the main, a relative comparator due to the differing number of shares in issue for each company.

The only other thing it really tells me is that if I had a $100 and bought a single share in these 30 companies, at a point in the past, how much would they be worth today (allowing for a changing line-up of course).
But, this would also fail to account (visibly at least), for share splits which pro-rata a share price downwards whilst relegating the company in the the index. At which point the index would then not accurately reflect the current worth of the initial investment.

So, can't say I understand what a price weighted index achieves.

Back to Apple though. If it were to be included in another index then, as the article suggests, it could trigger further "catch up" buying from index trackers etc.

Onwards and upwards.

Related article links:
- http://seekingalpha.com: The Apple Stock Split And Its Effect On The DJIA

Blogger winding me up!

Blogger starting to wind me up. Have been trying to do monthly updates but it keeps losing formatting of copy and pasted tables meaning I end up with a single column?##!
Bizarrely always seems to be something different with the HTML coding despite my following the same process each time.

Project Verde: Lloyds Banking sells 632 branches to Co-op.

Almost a nightmare to have a picture of Gordon Brown come to mind again but today's business headlines' include reports that Lloyds "Banking Group" has sold 632 branches (Project Verde), to Co-op as required by EU Regulators.

So that's a regulatory requirement then.

I can remember back in the day (2001), when the UK had similar concerns over LloydsTSB's expansive acquisition plans as it strove to become a European size banking giant with the acquisition of Abbey National as it was then called.
I also recall that the proposed acquisition was blocked by the UK's Monopolies and Mergers Commission as it would have given the enlarged group a 27% share of UK Current Accounts (Lloyds TSB/Abbey tie-up blocked), with 25% being seen as the water shed.

Roll the clock forward to 2008 and Caveat Emptor, Trojan Horses, hospital passes, greed and any number of similar terms come to mind as Lloyd's walked straight into what appeared to be Gordon Brown's and Mervyn King's desperate attempts to sell them a "cut and shut" used car in the form of HBOS.

No mention was made at the time that the BoE had been making secret loans to prop up the bank and Gordon Brown seemed to imply that any anti-competition fears would be steam rollered on the basis of National Interest!
Then Lloyds, under CEO, Eric Daniels and Chairman, Victor Blank (I know, if it was fiction you'd think the name too obvious), failed to follow due diligence in their greed driven stampede to take over HBOS and ended up with...wait for it...an estimated 30% market share of UK Current Accounts.

Then, after having apparently been duped into paying £12bn for this dodgy used bank with no warranty and no get out clause, Lloyds itself went back to the same used car salesmen for a £21bn loan!

Even more laughable (you really couldn't write it as no-one would believe it), the enlarged organisation was then informed by the EU Monopolies Commission that the combination of increased market share AND the £21bn bailout gave Lloyds too much of a competitive advantage so they would have to sell 632 branches/4.8m customers (3.1m Current Accounts), which would bring its share of UK Current Accounts back down to 25%!

On the face of it, it even looks like they, and tax payers have lost out on that deal as well with just £800m being raised (£400m of which is dependent upon performance up 2027), as opposed to the £1.5bn equity capital valuation.

Just what was the point!

For me at least, it appears that Brown and King failed to undertake their accountable responsibilities on the grandest scale.
For National Interest read self interest.

HBOS should have taken the bailout directly, so maintaining a big five whilst ring fencing some of the worst contagion risk. 

As it is they allowed a further well to be poisoned.
Further like any pseudo-takeover in the real world, seats on the board should have been taken to ensure that shareholders interests (i.e taxpayers), were suitably considered in what was and continues to be the Banking industry's flawed decision making and pyramid remuneration schemes.

To be fair it has been stated that Lloyds would have required some form of bailout without HBOS but given that the bailout totalled £21bn and Lloyds paid £12bn to take on HBOS's toxic assets, I personally find that difficult to believe on anything more than a minimal scale.

For example £21bn of bailout less £12bn paid equals £9bn.
But if the bailout was even remotely related to the level of bad debt in the combined group it could be argued that 50% of the £21bn might have been Lloyds and 50% HBOS (and I have read nothing to suggest that the majority of the "toxic" debt wasn't HBOS's).

So without the purchase of HBOS lets say the sum "could" be £10.5bn of bad debt existing on the Lloyds book's but then (without HBOS), Lloyds would still be able to raise/call on £12bn that it wouldn't have paid out to HBOS shareholders.

Taking the scenario further if Lloyds could have covered its own share of the bad debt of £10.5bn (50% of £21bn), then the taxpayer would only have had to support HBOS for the other half, £10.5bn.
Any change to the 50/50 assumption would obviously increase/decrease one side or the other.

The missing bit would have been absorbed by the HBOS share price which had collapsed but in turn this would have found a new level given that a bailout (from any source), would have re-established the bank as a going concern and reduced uncertainty about its future.

So it could be suggested that Mervyn and Gordon have probably wasted £10.5bn of taxpayers monies that they could have avoided if they had been decisive rather than secretive and underhanded as history suggests!

For shareholders in Lloyds, a retail bank relatively unexposed to the "instruments of wealth destruction" of the credit crunch before HBOS (if not the liquidity issues in the aftermath), it has been a nightmarish destruction of value and betrayal by Blank, Daniels, King, and Brown (and extended sycophants/advisors).

Its really galling that there seems so little consequence in the world to those involved who continue to be well rewarded despite their obvious, and very public, failings, and their betrayal of those they were/are in place to protect.

Really galling!

Related article links:
- http://news.bbc.co.uk: Lloyds TSB/Abbey tie-up blocked
- http://news.bbc.co.uk: Lloyds TSBHBOS deal
- http://www.lloydsbankinggroup.com: Moodys_LBG_15Jun11.pdf
- http://www.sharecast.com: Lloyds and Co-op agree on a price for Verde branches