Rough week for me and Vegetarian cottage pie with chestnuts and mushrooms

It was all pointing the right way on Monday when I got my buy signal. Tuesday and Wednesday were good strong up days and yesterday saw just a little pull back. I duly picked my shares in three batches, on Tuesday, Wednesday and Thursday but up to now my picking  systems have let me down badly.

In the US I bought DRYS,SIGA,GNK,CTHR,ZHNE,SID,KTOS,GGB. Only CTHR is showing a profit and DRYS and GNK look horrible. Re-examining the charts for those two, retrospect suggests I should have been more careful. They were already extended having enjoyed a huge run up.

They are both in the same sector. Dry bulk shipping which is benefiting from a massive rise in freight rates. In theory this should translate directly into profits. So they could still come good.

The FTSE also saw a nice run up but my picks of UTV, BOY, LLOY, INCH, KLR have yet to offer any decent returns. Yesterday I bought FSJ and CKN. They are in the marine freight servicing industry, they have shown steady price growth and should benefit from the market movements that saw DRYS and GNK skyrocketing. They are the best performers in my UK picks even though I only bought them a day ago.

It is early days but the losses hurt.

I pulled out of my small gold holding which looks to be going nowhere.

The big lesson from all this is that the world economy must be on the mend. Such a sharp rise in dry shipping rates suggests that world trade is on the move. Watch out for that tapering and higher interest rates. US retail sales figures are out later today which should give more guidance.

Vegetarian cottage pie with chestnuts and mushrooms

A vegetarian friend came to supper. It is always a challenge finding something unusual to cook. This one did the trick, though my wife had some reservations. Luckily guests seemed satisfied or they were ultra polite.

For the topping I boiled vegetables all chopped small: 2 large potatoes, 3 parsnips, 3 carrots, half a celeriac. When they were soft I mashed them with plenty of butter, about 75ml of milk and a desert spoonful of french mustard.

In the mean time I made the filling by frying 2 chopped carrots, 12 whole peeled shallots, 5 cloves of garlic (chopped). I then added , fresh rosemary,  a desert spoonful of tomato paste, a couple of tsp of Marmite, a tin of chopped tomatoes, a generous splash of white wine, and quarter of a pint of vegetable stock. I added a pound of mixed mushrooms of all shapes and sizes (you can get so many types in supermarkets these days) and 200gms of cooked chestnuts, I used the vacuum packed sort and halved them. 

I put the filling into an oven proof dish and spread the topping over. I added some grated cheese (my favourite is cheddar). I then baked at 180 degrees for half an hour and finished under the grill to brown the cheese.

My wife's complaint was about the amount of tomato paste which she thought dulled the flavour. Try reducing or excluding the tomato paste if you would like to cut back on that rich tomato taste. I think you would have to add some flour for thickening to replace the paste.

Nails bitten to the quick

The big question for me is: will that line hold? For the past three days it has teetered on the brink. Today is no different. The market has broken down but has not yet penetrated the lows of the last few days. Only time will tell. But I still have no negative signal.

Individual shares on the other hand are different. I have two that are creaking all of a sudden. GTN is really bad and EVC is almost as bad. I think I have to get rid of both. The question is do I wait till they recover a bit or do I ditch them now and take the whole of the horrible losses. I'll let you know when I decide.

Clear information is emerging about my stock picking systems as they work in the real world. The two top unisearches in my list (A and B) are indeed performing the best. A has generated the equivalent of over 50% return pa in the space of a month when the market has done nothing. System B is not far behind. System D on the other hand has generated some dismal returns.

The results are more or less as expected, but until you try in the real world you don't know for sure. It is almost time to take profits, rerun the systems and buy new shares. A good moment to ditch the shares bought with system D and go to systems A and B 100%. (See this post for the original work on this selection of unisearches.)

It's summertime and we have loads of visitors so posts are shorter and less frequent. Bear with me we shall soon be back up to speed.

How well have those share picking systems performed?

I have a plan

We’re now 9 days in from my first buys on the US market. The overall return has been 2.6%.

I hate the way that Vector Vest shows the Annual Rate of Return to indicate how fast a portfolio is growing over a short period of time. It gives you a clue about the rough trajectory of your stocks but there is nothing to say they will continue on that course. For what it’s worth and using VV's approach the portfolio is making a little over 70% p.a. Over the same period the VVC has fallen back by 0.3% or -9% on an annualized basis. The metrics on the performance of the strategy are good.

The strategy uses a number of different unisearches to pick stocks. See this post for the original analysis.

• The A search which performs best in backtests but is risky has done well. It has chosen 8 out of the 14 shares. 6 out of 14 are winners- average increase 3.5%
• The B search picked 3 shares : 2 winners 1 looser – average increase 6.7%
• The D search also picked 3 shares : 1 winner 2 losers – average loss 11.3%.

So what now?

I have decided to use my ISA account again to buy US shares. I still have some free cash and I will use the C search to pick my next lot of shares. Timing will depend on how the market is moving and my gut. 

We are in a consolidation period. My judgement is that it will burst out to the upside but I must be ready to be wrong and to know what to do if that happens.

My US system has two stop criteria for pulling out:

• The first is a four week stop. This means I will start selling shares on 15^th August
• The second is a 5% trailing stop which would be triggered if the market moves into a downtrend.

So I have a plan for the US market.

Those pesky UK shares

For the UK market I do not have a plan. The 25% stop loss and 50% take profit are my only strategies and those are based on guesswork and previous experience. The rest of what I do just has to be gut feel.

The two strategies I am using for picking shares are performing poorly (see this post for how they performed in back tests) particularly since they have been running for almost a month. The analysis does not offer much hope for an improvement over the next two months unless the market picks up strongly. 

The results are as follows:

• DBH has 2 winners and six losers average loss 5.8%
• 
  
• VSTPE has 2 winners 2 losers average gain 1.6%

A lot of thought is required about what to do next.

The wait goes on

Within 50 points of the all time high

The DOW climbed to withing 50 points of its all time high before throwing in the towel and ending the day down. Worryingly this was on moderately high volume so it could be a sign that this is the end of the line. 

Over the past couple of days, I have been shedding shares that have not done so well without replacing them (LRAD, GVA, MSO, SOMX). This, together with earlier sales, has brought my cash holding up to 32%. So, deeds being more significant than words,  my outlook on the market would appear to be hopeful but cautious. I can't say more than that.

I have been making cakes over the past couple of weeks. Yesterday I made one to my own recipe that worked out rather well. It was based on a Jamaican fruit cake recipe that I found but was impractical because it had huge quantities of ingredients. I had also seen a recipe with wholemeal flour which I wanted to try so I linked the two together.

Jamaican fruit cake recipe

 

I mixed up 140gms of wholemeal self raising flour, 140 gms of sugar, 140gms of butter, two eggs and a generous teaspoon of baking powder. I used my Baymix (a sort of stick mixer) to blend these ingredients.

When all this was thoroughly mixed together I added about 150ml of wine, about 200ml of rum and a couple of desert spoonfuls of treacle. (My wife, it turns out, does not like the flavour of treacle so next time I will give it a miss.) The added liquid made the mixture a bit runny so I added some wholemeal flour to thicken it a little but not too much (say 50 gms). 

I added about 50 gms of cut up dried exotic fruit from Sainsbury's and similar amounts of cut up dates and walnuts and a peeled cored, and chopped apple. I mixed in the fruit and nuts with a fork and spooned the mixture into loaf tin with a silicon lining. I baked this in a preheated oven at 180 degrees C for an hour. I checked with a skewer to make sure it was cooked through and then turned it out on a wire tray to cool. 

It is moist and delicious.

Back in the doldrums

After last week's scare we are back in the doldrums. The market has recovered - a bit. It has bounced through our two resistance levels. (You will remember that these are highs established in May and July last year. The next resistance level which I have just added was established in May of 2008, before the 2008 market crash.)
Currently the market is struggling with the 13000 level which it has breached briefly before falling back. It is also below the diagonal trend line support level.

At present I working on the assumption that we are poised on the brink of a renewed bull market which may be short lived. I am therefore picking shares that should generate short term gains using two strategies:

• I am currently experimenting with a month by month share picking pattern. I buy shares and hold them for a month and then replace them with a new batch. The reason for this rapid rate of turnover is because the shares I pick are in reasonable companies that have been severely beaten down in price. These shares can show spectacular returns but carry a high level of risk and meteoric percentage rises can quickly evaporate. These are shares that I seek out in the US, Hong Kong and the UK
• I am also buying shares using my tried and tested UK system that looks for shares which have out performed the market and have exceptionally attractive fundamental characteristics. PE ratio, predicted growth rates etc.

So last week I was frightened out of my positions based on the first strategy, with a moderately better than neutral outcome; and held onto the shares bought using the second strategy.

As things settled down and the market recovered I bought back into strategy A, a little more cautiously than before. The US shares I bought were PCX DMND STRI AMRS PMFG. They are already showing a nice chunk of profit. In HK I bought 886 267 2328 2342 and 1828. They have yet to show a profit. In the UK I strengthened my portfolio of strategy B shares with VP. BMY RNO and SPD. I'm still waiting for an uptick in those.

Remember that nothing here is a recommendation. I mention what I have bought so you can all watch and then have a good laugh if I fall flat on my face OR think how right he was if I don't. 

Pip pip and good luck with your endeavours.

Colywobbles

I've started to lose my nerve. Only a bit, and it was the result the sudden fall in the gold price. It should not have come as a surprise because it has had several failed attempts at the $1800 level. The silver price has followed. I snatched profits as the fall began. By then the various mining stocks were wobbling. I was too late to grab profit except in LMI where I managed to take 4% accumulated since Feb 7. I've held onto the remaining miners where there is a reasonable chance of recovery since they do not specialise in precious metals.

Last night I threw in the towel on ALVR where I was nursing a 15% loss. As ever you tend to give up just as the bottom has been reached and today we see a small recovery. Makes you want to spit.

With less pressure on my cash I have bought some more from my patented strategy filter. I bought VP. BMY and upped my stake in LAM. ISA's don't let you buy AIM shares and I still don't have sterling cash to spend in my SIPP. As a result I've had to give the AIM shares that came up as candidates a miss till I can free up some more cash.

Back to the panic. The DJI is stuck. It's hovering just above a resistance line and if you add in the days it hovered below it has been sitting there for a month. Will it make the break or is 12875, the high reached last May, going to be a step too far. Yesterday it closed above the 13000 mark and it keeps nudging that level but it needs to move convincingly above it before I will feel confident that resistance has been broken. I wonder if that fall in the precious metals price is a break in the link between gold and Dow. I've just put my money on that bet. But I'm nervous as I walk away from the bookie's counter.

The buying continues

Behaving as expected

I have not mentioned it before but I subscribe to an American service called VectorVest. I have been a subscriber for about eighteen months and it has paid for itself many times over. In the early days of my subscription the market was running along nicely. An ideal time to use its remarkable data bases and tools and I made loads of money. The more tricky conditions of the past year has meant I have held back and not used it so much. It offers a number of tools to help the investor:

• a market timing system, with which I have yet to come to terms
• individual stock analyses which need some getting used to but are fine if you accept an element of black box technology. I do but I would prefer a more transparency so I could do a more of my own analysis
• almost three hundred systems for picking stocks that match the criteria that you think will find future winners in the market
• a back testing facility for those stock picking systems that is truely amazing and which is what has made me all that money

They also provide a user education system which is delivered by easy to follow videos - one a week and they are available for ever so you can always look back.

I use the back testing to look at periods in the past which are similar to the one I expect for the market in the near future. I then identify stock picking systems that match the circumstances. For example in the past few months I have looked for systems that work well in recovery markets. They have generated fantastic percent gains in short bursts.

I am now looking for systems that do well month in and month out. Again I am looking for good returns inside a month. I have found several which over the past 15 months have generated 4.5 to 6 percent each month. Think about it, that's 60% in an indifferent year. They don't make money each month, and you have to refresh your portfolio once a month but for 60% in a year it's worth it.

I'm working on the principle that there is a bit more of this bull run to go even if we get a bit of a pull back in the short term because the market is overbought. So I'll buy the shares and hope for the best. Worst case scenario is that I will be stopped out.

I have an automatic system for picking the best search systems in the US. It cost a lot but it is worth it. So I have bought the top 5 shares that are becoming more attractive to investors and are in sectors of the market that are rising. The shares I picked are SPPR OPXT ALVR SILU (Not recommendations remember, just shares you might like to watch).

I have to do the backtesting for the UK manually so it will take me a while but I will report on my progress.

In the mean time my shares from a week or two ago struggle on (shares that have touched the bottom of a range). I offer Weir as today's chart to show that sometimes these shares behave as expected. I have plenty of cash so I can wait. But this plan has not been a red hot winner.