I am a great believer in the idea that 'actions speak louder than words'. What do I think of what has happened in the market over the past couple of days, and what do I think will happen next? Whatever explanation I come up with and whatever forecast I make means nothing. It is theory: an "after the fact" justification of what is now known and what was unknown two days ago. What you may find more helpful is knowing what I have done. That encapsulates what I now believe. What have I done? I have sold almost all the shares that I owned. I was almost fully invested so that is a lot of shares sold and and a lot of money encashed.
First let me say that I have no idea if I have done the right thing. The market may bounce back. For some time I have been feeling very bullish. That bullishness vanished yesterday. I believe that the ability to change one's mind in the face of facts is a strength. I shall not be afraid to change my mind again if the facts change once more. The thing that has changed is the mood of the market.
I sold my shares at once when the UK market opened down and when I saw that the futures indicated another big fall was likely in the US. I sold my American shares when the US market opened and I took another big hit after the one I'd suffered on Thursday. With the benefit of hindsight I would have sold my UK shares one day before because of the tweezer pattern I mentioned in yesterday's blog.
I was out when the US market opened on Thursday and I might have thinned my holdings if I had been watching developments. On that day the market spent the afternoon and evening giving me back some of my losses and there was insufficient evidence to distinguish this fall from a temporary pull back.
Once the market opened yesterday the writing was on the wall and I pulled out without hesitation.
So what now? Despite the setback, I have still made a significant inroad into paying back my accumulated losses but my situation remains poor. I hate to say it, but for me the best outcome would be a very sharp pull back. 20 or 30% would be ideal. I have the skills to pick shares that make the most of the recovery and the returns that can be made in those circumstances are exceptional.
But that is wishful thinking. What is more likely to happen is that I will watch the market swing back and forth, repeatedly tempting me to jump on board a rally which turns into a bull trap. This is a problem to be tackled another day. For the time being I am out and can breath easily. Early indications are that Monday will be another nasty day.
So good luck to one and all.
GVC
Incidentally I am still holding my GVC shares. The dividend yield is phenomenal and paid quarterly. The PE ratio and earnings growth are exceptional. Nevertheless a big pull back in markets is bound to hurt the share price. If I did not already have a substantial holding I would see any significant price reduction as a buying opportunity. I don't want to sell because the spread makes sale and repurchase tricky and I could miss a good news filip.
Just so you know, the risk for this company is that they operate gambling related services in unregulated markets. New regulations could disrupt their operations.
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