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Diary of a Top Stocker: can I invest my way out of trouble?

I've identified 11 Top Stocks that could be good value after the recent falls. Have a look and help me prepare for a big roll of the dice.

 
Diary of a Top Stocker: can I invest my way out of trouble?

It’s high time I updated everyone on what I have been doing – or rather not doing – with the Citywire Top Stocks® portfolio.

I’m afraid my performance has been poor, worse in fact than the Dumb Investor! However, I’m not giving up yet, as I think the recent market falls give me an opportunity to buy into some good stocks at a good price.

How I’ve lost 12%

Yes, I’m a shocking 12% down on my investments so far. I’ve spent just over £6,000 on six stocks, which are now worth a total of £5,281. That leaves me with just under £4,000 of Citywire’s money to invest. What will my boss say?

The performance looks bad against a FTSE 100 that has fallen 4.8% since the start of the year. It looks less bad, however, against the index's fall of 10.6% since 23 February, which was unfortunately when I started investing. Part of my problem is that I invested as the new year rally started to fade.

Two of the three stocks I chose to start off with have held up well. The £996 I spent on GlaxoSmithKline (GSK.L) is now £964, according to my account at Barclays Stockbrokers. The £999 in Vodafone (VOD.L) is £965.
However, Royal Dutch Shell (RDSb.L) has disappointed, turning £989 into £842 today as economic fears have sapped the oil price.

My next purchase was Weir (WEIR.L), the pump and valves manufacturer and favourite of fund manager Nigel Thomas. I took a punt on Thomas knowing more than the stock’s many short sellers, but this has so far proved fruitless as the company’s oil-related business has slowed down dramatically. Here £1,007 has become just £843.

I followed this up with BP (BP.L). This is the one I’m really embarrassed about. My decision to buy shares in the troubled oil giant before the market opened on 5 March was in response to an article saying BP was poised to finalise a compensation settlement over the Gulf of Mexico disaster. I hoped to capture a quick rally, which didn’t transpire. Since then my £1,011 has fallen to £773, easily my worst performer. Lesson learnt, I really didn’t need another oil giant.

All I can say is I’m not alone. I listened to Tom Dobell, manager of the M&G Recovery  fund, criticise BP’s performance recently, and it made me think something will happen at some point at the company to improve returns. It just may not happen quick enough to erase my mistake.

I don’t feel so bad about my last purchase, Cookson (CKSN.L), the materials technology company, on 2 April. I bought £1,013 of shares as it became clear that the company was considering a demerger to increase shareholder value. That hasn’t happened yet, with my stake worth £891 today, but I’m pretty confident it will.

Why I’m not giving up

I may not be a great stock picker, but I’m giving this portfolio another big roll of the dice.

To be fair to myself, only four of the 42 current Top Stocks have risen in the past three months. Given when I started and that this is the pool of stocks I have to choose from, perhaps I shouldn’t feel too bad. To be in positive territory since I’d have had to hold house builder Galliford Try (GFRD.L), IT company Misys (MYS.L), National Grid (NG.L) and ITV (ITV.L).

My biggest problem has been that the Top Stocks are all good companies. They’ve generally sat in the portfolios of our fund manager panellists for some time, and as a result are generally well known and fully valued situations.

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13 comments so far. Why not have your say?

dpeddlar

May 23, 2012 at 14:55

Buy more shares in Shell, you will be rewarded over the long term.

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PAUL THE BEAR

May 23, 2012 at 16:28

It doesn't matter what you buy , we're on the way to FTSE 3500 , good luck !

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wayne roberts

May 23, 2012 at 17:31

Patience.. wait for the mother of all crashes which will probably happen when the PIIGS all go bust, notice which sectors bounce off that low and invest in the strongest companies within those sectors.. when the macro news can't get any worse is always the best time to buy for the long term.. you can't accurately evaluate your account with all this bad news.. this isn't the time to do anything, just enjoy the summer!

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Michael Peters Fenwicks

May 23, 2012 at 17:41

It's possible to deliver a meaningful strategy within a few days but you will have to evaluate how much risk you can tolerate.

My advise would be to trade the futures/indexing - two completely different styles. Futures trading Vs Indexing Trading most members will be familiar with those instruments.

Caution - To do the above research your subjects and would only suit confident experienced investors.

Simple as that!!!

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gggggg hjhjkl;'

May 23, 2012 at 18:02

Gavin I do not think you are doing badly at all (and much,much better than the erratic DI).

Your experience merely shows that it is time not timing which counts.

If you have researched your picks well and nothing has radically changed since then, then patience is the virtue that you need to foster.

For me investment is as much a psychological exercise as anything else. In order to be successful you need to know yourself very well indeed. That takes time, experience and I am afraid a fair number of mistakes along the way. As they say "the man who never made a mistake, never made anything".

If investment was easy then the 85% or so of professional managers (and 70% to 80% of private investors) who fail to beat the market would do a lot better than they do.

As corporal Jones said "don't panic!!!"

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Pat

May 23, 2012 at 18:36

I like Balfour Beatty.

Any recommendation on beneficiaries of infrastructure projects?

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masud butt

May 23, 2012 at 22:04

This is bad times, every thing is down, sit tight, will help, during my investing period, I have seen many situations like these.

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Anthony O' Grady

May 23, 2012 at 22:37

Listen to Jeremy grantham. The whole notion of 'stock picking' is flawed. It's the big macro events one needs to anticipate.

There are several potential outcomes from here, and if the worst happens (disintegration of the Euro - my favoured outcome) then a 3000 a 4000 FTSE is perfectly possible, or lower!

Marc Faber thinks that there may be a rally in stocks when Greece exits (which she surely will, despite certain delusional Eurocrats/Politicians) but this won't stop the inevitable implosion in stocks when the Euro project finally hits the buffers. Keep your powder dry, and if you have an hour each day, read Templeton's way with money, strategies and philosophy of a legendary investor. Great book, and a pat on the back for Jonathon Davis and Alasdair Nairn.

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Pat

May 24, 2012 at 09:09

Templeton is good, not sure about the others.

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Gavin Lumsden

May 25, 2012 at 09:14

Thanks everyone for your comments, I'm feeling a bit more encouraged, notwithstanding the awful euro situation!

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Twister Spitzer

May 26, 2012 at 11:28

It looks like you've got some good choices of good quality companies available at attractive prices right now.

The problem with attempting to time the markets based on macro issues is that you might be right, you might be wrong. As a previous poster noted, Greece could exit, causing the market to rise out of relief instead of fall. OTOH, the bear market may well not be nearing even close to its end.

Predictions are very difficult to make, especially about the future.

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Melody9999

May 27, 2012 at 09:54

buy some xuks to balance the long portfolio

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david rogers

May 30, 2012 at 17:55

Buy Capital Gearing Trust. Up 8% (NAV) April 2022 to 2012. and trading at a much lower premium than usual (3% versus about12) Read results to April released yesterday at the LSE website to see why.

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