Back in June it was a ruthlessly dull market and I seemed to be repeating myself. I guessed my readers were as bored as I was. Unable to make money on the downside and no upside in prospect I buried my head in the sand and gave up.
Without realizing it, I had lost my nerve. For twelve years I had done so well in good times and in bad. And then in the year ending April 2012 I suffered my first bad loss. I continued investing into the next year and money started to flow in again till the end of May. And then I proceeded to lose it all. Not surprising given what was happening in the market but normally I could weather those storms. In my blog I tracked the gyrations that followed but made no money. I avoided the fall that started mid October but made nothing betting on the bear market using CFDs. Clearly that is not my forte.
I was a lost soul and only came to my senses in early December. I kicked myself hard and reminded myself that my talent was in share picking. With the market on a role I had to be there.
The start was shaky because of the pullback that occurred over the Christmas period. But I had the confidence to sell, take my losses and pile back into the market as soon as the rally resumed.
I invested in three markets: Hong Kong, New York and London. Hong Kong did not work and I have converted my holdings of HK$ into US$. My returns on investments in the US were 4 times that in the UK. So I made the decision to move all my investments into the US.
I have hopes that this will prove to be the right decision despite the considerable extra costs of trading my ISA in the US. Holding foreign currency in an ISA is not allowed so each time a share is bought or sold I have to pay the cost of currency conversion. In addition my ISA provider does not support the full range of US stocks.
Despite these disadvantages in the space of two months I have made excellent progress. In cash terms I am 2/3 of the way to making my cash target for the year (the money I need to live) and I am well over half way to achieving my ideal percentage return of 18%. What I need in the last two months of my financial year is a positive stock market environment. I think the odds are in my favour.
So what are the chances of a flat or rising market up to the end of March?
Two thing lead me to believe that luck may be on my side. The first is the unabated willingness of governments to print money. This money is not generating price inflation (so far). House prices remain in the doldrums. The main asset inflation is on stock prices. My guess is that the stock market is where all that cash is going.
Secondly the charts look promising.
The long term chart shows that the Dow Jones is reaching the level it achieved in October 2007, its all time high. It is not surprising that traders have been forced to give pause for thought.
However the point reached by other main indices such as the FTSE and the S&P suggest quite a way to go before they too hit the ceiling of the level reached in 2007.
A further encouraging sign is the lack of any crescendo in trading as the market approaches this dangerous level. The daily moves up and down do indicate that there is a fight going on between the bulls and the bears. But unremarkable trading volumes suggest that no-one is trading with conviction. That suggests to me that a continuation of the rally is more likely than a reversal. Time will tell if I'm right.
I'll write again later in the week and tell you how I have picked the shares that are doing well for me so far and how things are continuing to pan out.
All support through comments and followings will be gratefully received and will encourage me to keep going.
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