february '01

News and Comment.

The portfolios total took a real hammering this week but unlike previous disasters this one was very predictable. I must admit that it was through the haze of a flu induced apathy that I just shrugged my shoulders and decided to wait for heat to die down.

The market is not in the mood for forgiving high tech companies who have anything less than a story of continuing growth to tell. Unfortunately, Imagination Technologies had to admit that the decision by Sega to end production of the Dreamcast console would effect profits in the second half and it hit the fragile share price for six. Forty one percent was knocked off in two days but the real surprise was the markets slow reaction. It has hardly been the best kept secret that the Dreamcast was the David against the Goliaths of Sony, Nintendo and Microsoft, with the less than shocking result being that the Dreamcast was beaten.

The announcement came as part of a trading update by IMG that I took as more reassuring than virtually everyone else, with the exception of their institutional shareholders. The short term position will be affected by the Sega move and the poor PC market in the US and Europe but the management has taken the right steps to position the company away from almost total reliance to less than a quarter of profits by the end of this year. The use of Dreamcast architecture in new products and the new partnerships will eventually create a much larger market for IMG's technology, but in the meantime the share price could drop even lower as punters who piled in after the ARM tie-up run for the exit, although who could blame them!

Another high tech company, former market darling and Chuffy holding, which appears to be cracking is Psion. I thought IMG's fall from grace was bad, but is chicken feed when compared to Psion's. The news that Motorola will not be proceeding with their jointly developed product has been another hammer blow. I have been a fan of this company for years and feel the fall is way over done, given the Symbian holding, so at these levels I intend to add this stock back to my watch list. I am certainly not going to be tempted to buy as yet but the situation warrants closer attention.

The decision by the Federal Reserve to cut US rates by another 0.5% really underlines the speed at which their economy is heading towards recession. The reaction of the market, or lack of it, was more noticeable than the press reaction and it will prove to be very interesting to see if Alan Greenspan has managed to steer the economy out its tail-spin. My personal opinion is that a recession, by definition of two quarters of negative growth, is a racing certainty and these cuts are aimed at preventing a full scale slump. The rapid decline in confidence of both consumers and business managers appears finally to be getting through to the Fed and the election of the tax cutting Mr. Bush will probably be seen as the better choice after all.

The Portfolios.

This week has a complete reversal in the fortunes of one of the portfolios and little else from the others, but there was one chink of light to lift the general gloom.

The Acorn portfolio took the full force of the drop in IMG. I fully expected some adverse reaction but the extent of the fall was painful to say the least. The good news came from Chorion who announced a new film deal to produce Agatha Christies Poirot for the US market and they have got the distribution rights for the UK. This new raft of exposure for the works of Agatha Christie accompanied as it is with news about further deals with the publisher Pearson couldn't have come at a better time as the company prepares for the demerger of the two divisions.

The Spartan portfolio produced a small fall again but nothing too worrying. The Pensions portfolio didn't move at all, which after the turbulence of the last month came as a relief. I am beginning to get a bit twitchy with the rate of progress at First Property Online, or the lack of it, who should have at least begun to grow the site faster than they have been.

News and Comment.

Oh well, at least the portfolios managed to pull out of the nosedive that was the previous week but its hardly worth hanging out the buntings for. All three of the active portfolios are still in negative territory and unfortunately there doesn't appear to be anything in the immediate future that gives me cause for any real optimism that things will change.

The markets are completely directionless with only the odd bid situation providing any excitement. As with last week, any company reporting difficult trading or even profit warnings are getting hammered. Its times like these that provide the best situations for spotting the companies that stand a better than average chance of producing growth.

The recent news that Imagination Technologies were to develop a combined chip with ARM Technologies made me take a closer look at ARM. At the same time that I began my researching they have released their latest set of results which were way above market expectations. I must admit to being a bit flippant in the past when it came to investing in this business but I am slowly becoming more interested as I look ever deeper into their technology. I am still in the early stages of researching but I am now beginning to regret selling my holding in Acorn Computers which was the original parent company of ARM many years ago.

The decision by the Bank of England to cut interest rates by a paltry 0.25% is not nearly enough to help off set the abolition of MIRAS for home buyers and the pain being suffered by UK business. I personally believe that the downturn in the US economy will effect ours just as night follows day and cuts of this size will do nothing, or am I being just too pessimistic?

The Portfolios.

There hasn't been much to report this week as far as the portfolios are concerned. The dramatic slide seen last week has halted and hopefully will be reversed, but apart from that its been pretty quite.

The Acorn portfolio rose on the "dead-cat-Bounce" experienced in the price of IMG and the welcome increase in the price of Chorion, which has been pretty steady since the New Year.

The Spartan portfolio fell again, mainly down to the fall-off in the price of the largest holding Ivory & Sime ISIS Trust. 

The Pensions portfolio again remained static with the First Property holding Online holding again holding steady. I kept an eye on trading volumes in FPO as they seem to be returning to the near non-existent  levels seen prior to Alasdair Locke joining the then shell company Hansom. I was planning on increasing my holding in this company shortly but now I must admit to being increasingly wary of the companies progress.

News and Comment.

I have not been a happy bunny over the last few months when it has come investing and publishing this site, which is not like me because I normally really enjoy everything about investing and saving. It has had nothing to do with the disappointing return from the equity portfolios and effort required to do with the site. I couldn't put my finger on what the problem is and I was on the point of calling it quits and stop publishing the site.

Then last week I had a "naked lunch" moment, a rare moment of clarity that enabled me to spot exactly the reason for my disillusionment. It can be summed up in two words, "market watching", a soul destroying exercise that brings nothing but heartache. Since I started the site I have let myself become more aware of the day-to-day pitches and rolls of the market, something that I didn't do before. In fact I never used to update any of the portfolios on a weekly basis, preferring to catch up at the end of each month.

Now I know what the problem is I can get back to where I was when I started publishing the Chuffy site. Researching and following companies is what really interests me and not the fund watching of the last few months. The effect on the site will be that I will increase the number of companies on the Watch List page to bring it into line with my "real" list that I maintain. This will be a long process so don't expect a mass of data appearing all at once.

Whilst I was experiencing this non- drug induced period I also began to take a good look at the portfolio make-up and must admit to be getting twitchy feet. I am tempted to do one of two things; have a good clear out of a couple of non performing holdings or start a new "mini chuffy" portfolio. I am still pondering!

The Portfolios.

The portfolios have racked up another week of losses all round that didn't surprise me.

The Acorn portfolio fell as both Imagination Technologies and Chorion back tracked.

The Spartan portfolio fell almost across the board as worldwide markets limped along. I have added another £700 to the Premium Bond account, not due to desperation but because I have just received and unexpected interest payment that had to be re-invested elsewhere.

The Pensions portfolio took another step backwards as First Property Online weakened. I really can't fathom out what is happening there at the moment. It appears that the site is shifting properties but there has been no new additions to the portfolio of sites for sale. Edinburgh Smaller Companies Trust added to their holding and there has been no great movements in the share register. There has also been no news concerning additional industry partners joining FPO that was muted at the time of the reverse takeover by Hansom. I am in two minds what to do; on the one hand stick it out because the property market is pretty slow at the moment or to call it a day and dump my holding and move on!

News and Comment

This week has been one of major re-thinks, changes to the site and plummeting totals. I have been busy drawing lines under pointless projects and redirecting my energies where I should have been many months ago, into researching businesses.

As you can see the Chuffy total took another pounding this week, but to honest, I couldn't give a damn. It has been positively invigorating not having once looked at the market prices of any of my investments for over a week and long may it continue.

The main changes to the site are the decision to end my misguided attempt to invest in the US, the improvements to the Watch List page and the beginning of the Micro Chuffy experiment. I also ended my association with the Snailpace.com project.

The USA idea was dropped because I don't believe I have enough experience to commit capital to investing in their markets, other than through collective funds, to justify the time and energy required. The improvements to the Watch List page are still in the early stages of development but its getting there. I pulled out of the Snailpace.com project because it wasn't going anywhere and there was a feeling of total apathy from the other investors.

The Micro Chuffy experiment is one of the areas where I will be concentrating my efforts over the next few years. The idea is to wind back the clock and begin again like I did in 1980. I have received many comments since I began the site about the viability of starting an investment portfolio with only £250. The costs of dealing and market spreads seem to be the main thrust of peoples reluctance to accept the possibilities that equity investment can achieve for the very small investor. I must admit that it has more than once crossed my mind to start over again and use different principles but never got around to it.

The portfolio will be completely separate from any of the others, it will start with £250 and I will add another £100 per month and any small change that comes my way and it will not appear as part of the totals for the main Chuffy fund. The portfolio will give me chance to try out systems like stop-losses, weightings and PEGS etc, none of which I use normally. Of course, if things prove to be better using such tools then I will begin to introduce them elsewhere.

The Portfolios

The portfolios had another appalling week with all three active funds reporting losses.

The Acorn portfolio took dive as Imagination Technologies fell to just over a £1 and Chorion lost nearly all of the ground it had made up recently. Chorion have their results coming out next month, where we will here more about the demerger.

The Spartan portfolio fell as nearly all the holdings slipped with only one exception, the Baillie Gifford Japan Trust which just sneaked ahead.

The Pensions portfolio retreated when First Property Online dropped back some more. I have been looking into this company over the last week and I will be posting my findings over the next week. Although they would not have been my first choice in businesses to reverse into the Hansom Group, I have been pleasantly surprised by my findings so far but I am still waiting for a couple of replies.

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