Citywire for Financial Professionals

View the article online at http://citywire.co.uk/money/article/a571861

Diary of a Dumb Investor: The Stockfather, Part BP

I’m pretty chuffed that I bought into BP (BP.L) only days before the oil giant reached a deal over the 2010 Gulf of Mexico oil spill.

 
Diary of a Dumb Investor: The Stockfather, Part BP

A man sits in a dark room, stroking a cat. A lamp enshrouds him in a cold light, giving his features a somewhat dangerous – and yet compelling – glint against the festering shadows. Cue the single violin that kicks off the theme to the Godfather.

But this isn’t Marlon Brando in 1972. It’s me in 2012, relishing the gains I’ve made in my investment in BP (BP.L) shares last week, only days before the oil giant reached a deal with a load of people whose livelihoods it harmed in the 2010 Gulf of Mexico oil spill.

That’s right, time to pay tribute to your new Stockfather!

Read Dumb Investor: the story so far

To recap, I dipped my toes in the stock last week with half of the remaining £2,000 in cash from a fund of £10,000, given to me by my great-uncle to invest. The move was part a play on rising oil prices, part punt on BP sorting out its legal difficulties.

And it looks like finally – FINALLY! – that one of my single-stock purchases is turning out okay.

Admittedly the reader response to my move was lukewarm, at best. ‘I get a sinking feeling when you buy shares I hold,’ pointed out Jayzee Cole, urging me to ‘please sell BP’.

And John Osborne wrote: ‘Who knows what will happen to BP shareprice, but shame you did not buy it when at 400p… At least now you are exposed to a good sector, if the oil price rockets and there are no more real nasties.’

However, while I did buy the shares at quite a high price, 503.3p, they have already risen as high as 512p this morning. And I’m not planning on selling them any time soon.

If anything, the recent performance of other parts of my portfolio shows me the sense of ‘buy and hold’ investing – even as some financial pundits brand this strategy as more moribund than someone who crosses the Stockfather.

Where I stood on Monday: Click to enlarge

Sign in / register to view full article on one page

21 comments so far. Why not have your say?

sgjhaghsdg

Mar 05, 2012 at 12:08

Out of interest, what's the total you've lost so far when broken down between trading fees, stamp duty, bid/offer spread and capital loss? I don't ask in any "pull the wings off flies" way, but to see how much is bad calls and how much over-trading.

report this

alan thorburn

Mar 05, 2012 at 12:38

To Dumb Investor :- Just remember you gain nothing until you actually sell at a profit !

report this

10Bagger

Mar 05, 2012 at 13:44

Being over diversfied when you only have a small investment pot makes no sense to me - costs are going to be higher for one. I see the dealing costs on your BP investment mean you are still showing a loss.

Dumb investor you might be but there is nothing wrong with your writing style. A fun read.

report this

wayne roberts

Mar 05, 2012 at 14:32

"I will sit now on my final £1,000 in cash until a stock makes me an offer I can’t refuse." Why don't you use this strategy for all your investments? You know buying when everyone is suffering their worst pain is the key to success and that takes patience and discipline: patience to wait for that final sell-off and the discipline to buy even though it will be painful.. BP will pullback at some point and then ADD that 1k to your position..

report this

Michael Peters Fenwicks

Mar 05, 2012 at 14:59

Thank God DI - you have gained a little discipline. When it comes to BP am afraid to say you have the jumped on board rather late but hopefully a new year allows you to learn from past your mistakes.

Please maintain discipline this year while reconciling the portfolio with good judgement.

This year markets will swing 50/50 so keep your eye on the ball by not getting carried away with too much enthusiastic numbers/gains.

Golden Rule - When it comes to victory it is always short lived hence the saying - while the music is playing dance but most importantly also show judgement when to departing from the dance flow.

Simple as that.........

Simple as that!!!!!

report this

Anthony Tinslay

Mar 05, 2012 at 18:13

Hi there DI - I am amazed that you can sound so pleased within a few days of making an investment and seeing a intra-day spark in the share price. As I see it you are running a loss on your BP ,- 504p close of business with all the charges and stamp duty you have paid and more whan you sell. It may well turn out to be a good investment over the longer term but hardly the time to get excited just yet..

report this

snoekie

Mar 05, 2012 at 19:23

Listen not to the nay sayers, it is a good share, but will be subject to fluctuations. Stick with it.

I only regret I waited some weeks, yes weeks, back when the price was circa £3.80, hoping for a further reduction to add to my existing holdings (one lot for the SIPPS and one for my personal portfolio).

And then there is the divi.

report this

Spotdog

Mar 07, 2012 at 09:15

Think you got into BP too late. Can't see much more upside to the price you paid for it.

Just out of interest. Did anyone buy Asian Citrus (recommended on 26 Feb). Its up 15% since then.

report this

Michael Peters Fenwicks

Mar 07, 2012 at 10:05

Spotdog - the right time to buy this instrument was in December mainly as a short time instrument.

ACHL I believe may not make any other gains here on as have sold it twice likewise the hold option in a cycle of 12 days since last month.

Technically speaking buyer beware due to some allegations of fraud within the press regarding assert portfolio of the company.

Newswire says - http://www.chinaeconomicreview.com/node/55191

report this

Spotdog

Mar 07, 2012 at 10:23

You are right, Asian Citrus is definately an "in and out in 30 minutes job", and to be watched like a hawk. I don't own it myself - have done in the past.

Still, there are quite a few buy recommendations for it at the moment with a price target of up to 65 p.

report this

Anthony Tinslay

Mar 11, 2012 at 14:14

BP closed the week at 494p - are you still chuffed? Hope you are not proposing to do the same as you did with Barclays and sell this week to 'cut your losses' Your Monday morning reaction awaited with interest

report this

snoekie

Mar 11, 2012 at 17:26

Said it before, I will repeat, ignore the doom sayers.

Hope you bought in time to get the divi, ie cum div, due later this month..

report this

Hilary hames

Mar 11, 2012 at 18:10

spotdog and Michael

re Asian Citrus this was recommended in IC I think as well

As a newbie investor hoovering up Citywire, IC and other online columns it seems to me that some of these suggestions to buy go round in a circle and unless you get in at the beginning its a waste of time quite often as something like this isnt necessarily a buy and hold.

So my questinon is especially to Michael, how would you have known in Dec that this was a pretty good time to get in - or is it just a regularly watched company for some reason by both of you?

Are some newswires/ people who write about shares a lot better than others or is it also a case of looking at a company an amount of time before it is due to report? With the best will in the world most of us have go a limited time to research so how best to use it wisely!

I read somewhere than ADVN has lively discussion boards on most companies but of course you have to know what companies to look at

Mainly I am a buy and hold investor over the last year (the time I have been investing) I have bought FTSE 100 dividend shares plus a few unit trusts and investment trusts. But am interested in short term buying and selling too as that can be useful too.

report this

Anthony Tinslay

Mar 11, 2012 at 19:34

Hilary Hames - short term buying and selling will certainly please the broker with plenty of Commission but unless you really understand what you are doing it is a recipe for making losses. Shares like Asian Citrus and the many smaller Oil companies often mentioned here are speculative and it is likely that you would always be following the event and more than likely to lose money. It can be fun and indeed profitable at times but 'Caveat Emptor' is the rule .If you take that route then I strongly advise you to gamble only what you can afford to lose.

report this

snoekie

Mar 11, 2012 at 20:46

Hilary, I agree with Anthony.

I tried it two years ago, feeling fairly safe with a prospect of a drop with L & G and Old Mutual, sold at 84 p and £1.15 respectively, and I had been watching and buying in on the drops, so I was in profit anyway, hoping to make more.

They never did drop, and are now circa £1.20 and £1.60, respectively.

Not to worry, I bought in on different drops, BP £4.25, and Alfren to mention but two. Do not be in a hurry, and I reckon in the main the market is somewhat high at the moment to speculate in.

One door closes, others open, if you have the patience and reist the urge the spend that money burning a hole in your purse. DO NOT limit your options, also watch AIM and the tips that come put, but never more than 5% of your portfolio, to a degree this is the mad money element. Done properly you should win on most.

report this

Michael Peters Fenwicks

Mar 11, 2012 at 21:48

Hames,

happy investing while I answer your question regarding ACHL in simplistic form.

Regarding that choice, it is a very simple yet classic equation of scanning a selection of instruments for short term diversification while turning some quick positive results.

I guess the secret is looking ahead while choosing a number of instruments that deliver short to mid term returns while the long vs hold houses the portfolio foundations.

With regards to ACHL - am afraid it is a selection of instruments that I hold and sell many times during the trading cycle after all it is always better to take the profit at the end of each day advise am always giving to dumb investor.

Secondary reason regarding ACHL is the fact that it was reporting sometime in the new year which at times if the market expects the lead up rewards short term investors with plenty of fat on the meat than the arrival.

Finally sometimes it comes down to just riding the wave hence the saying that if you can't change the direction of the market just adjust your sails meaning that one may sell an instrument many times while buying it for meaningful results.

But most importantly was how did I know in December?

That was down to the simple use of clear forecasting through technical analysis and common sense which is a similar situation thus thomas cook being health lately - it has proved meaningful lately.

I hope that was meaningful:

report this

Hilary hames

Mar 11, 2012 at 23:32

Yes, Michael, thank you I certainly understand most of your points.

I had gradually, as a new investor, begun to realise that some share prices can move upwards quite nicely before reporting and a short term hold in the weeks before can be beneficial.

So I should go to a website that lists several weeks ahead the companies that are going to be reporting and then apply some analysis to those companies (or a selection of them if I am not to stay up all night).? The only companies I have 'churned' so far have been Lloyds Bank and Cookson, the latter when it was much cheaper back in the autumn - I would have done better to have hung onto that one!

In terms of 'adjusting your sails' I probably have done that once or twice when I have sold Vodofone on a very good day and bought back on a dip, I want to hold that share longish term for the dividend.

report this

Spotdog

Mar 12, 2012 at 05:47

I also agree with Michael. Never invest more than you are prepared to loose.

Asian Citrus is a stock I have just kept my eye on, seeing as I have owned it before.

A useful site for tips, but this you probably know is actually in the Daily Mail, Money, markets, broker views. Every day there is a list of all analysts buy/ell recommendations with target prices etc. I also subscribe to Finacial times and Investors Chronicle.

When I buy a share I always look at the P/E value and try and buy good solid companies, with a P/E of under 12.

report this

Hilary hames

Mar 12, 2012 at 21:37

Thank you Spotdog. I presume you mean the Daily Mail online, I will have a look

I normally look at brokers recommendations here http://sharedealing.nandp.co.uk/broker-views/ it comes from Moneyam I dont know whether you can see the information more quickly elsewhere.

I am a librarian so see the FT and IC at work plus the free parts of the website. Interesting you subscribe to IC do you think there is much advantage over the printed version other than speed and you can check back in the archive easily?

I think if anything I maybe look at too much and sometimes think that I should just rely on something like IC and get a life. But, being new to this game, I am a bit of a sponge at the moment.

report this

Spotdog

Mar 13, 2012 at 07:23

Hej Hilary

I think I have become damaged over the years. Was travelling abroad with a friend the other week, while she was reading Womens's Weekly, I was totally absorbed in Investors Chronical - love it.

Also I receive buckets of e-mails from amongst others, seeking Alpha (good if investing in USA), Motley Fool and Fool so a printed version of IC is a luxury for me.

Yes, I do mean Daily Mail online - very good money section.

If you have time, you should perhaps listen to Robert Miller's daily Business Bullet - Daily Telegraph, and read their Questor Share tips (Garry White). I have been helped greatly by their good advice.

report this

Hilary hames

Mar 13, 2012 at 23:23

Spotdog - 'damaged' I love it! I will have some of that damage if it will make me some money! I didnt know that Womans Weekly still existed, I remember it when it was in its heydey about 60 years ago full of sewing and cooking and knitting - give me a finacial mag any day.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire guide to investment trusts

In association with Aberdeen Asset Management

Fund managers from Standard Life Investments quizzed on investment trusts


What can SLI bring to the table for those who want to put their money into investment trusts?

More about this:

Look up the funds

  • Aberdeen Emerging Markets A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Old Mutual Global Strategic Bond A Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • BP PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

More from us

What others are saying

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet