march '01

News and Comment

Like most investors I am trying to ignore the mayhem that is being wreaked in the Global Markets and instead turning my thoughts of where is the best place to search for new investment ideas for the years ahead.

 The starting up of the Micro Chuffy portfolio has been a great help in doing this and has made me look at things in new ways. The portfolio has made its first purchase and I am busy sifting through reports and data for the next entrant which I think I have already spotted.

This new venture has had me looking through all my old notes going back 20 years for inspiration and what I have found so far has convinced me that it was a miracle that I didn't lose everything several times in those early years. I would like to say that hopefully I have learnt from those mistakes but I probably haven't. What I did get from looking at the notes was that it was patience and persistence that got me through the bad times, even when I was losing badly. To stress the point I noticed that at one stage in 1987 I saw 85% knocked off the value of the portfolio! Luckily it rebounded within four months to nearly its original level.

The situation now is nowhere near as bad as it was, even though in actual value wise I have lost more than then, but it has been very helpful to put things in perspective. 

I am in the process of "improving" the site so that it is easier to jump around to different areas but if you come across something that doesn't work like it should please let me know. I have also been adding more to the Watch List Page but I feel that its getting too large to be put on just one page and will be separating it out in the next few weeks.

This week will see the last budget before the UK election and I have always taken the view that they usually are the most interesting. Personally I couldn't care less which party gets in, but the "sweeteners" that usually accompany such a budget this time round probably won't be the usual giveaways considering the lead that the government has in the opinion polls.    

The Portfolios

As has been the way since the start of the year, practically all of the portfolios fell again. Just a look at the performance charts page tells the whole story.

The Acorn portfolio actually recorded a rise, definitely a rare event nowadays, with Chorion doing all the running. There was no major reason for this other than the news that Nigel Wray had increased his holding by 144k. Imagination Technologies has now fallen to under a pound but I still steadfastly refuse to sell!

The Spartan portfolio dropped again with nearly everything retreating but that's hardly earth shattering given the regular drops in the markets in general.

The Pensions portfolio took another beating with the price of First Property Online slipping once more. No major reasons, plenty of movement in the shares but mainly between friendly holders. Still, the impact on the portfolio wasn't helpful!

News and Comment

Dot com disaster! This week has seen the Chuffy total fall into negative territory for the first time this year. The excellent start is just a distant memory and if it wasn't for the one off gain from the sale of the commercial property then the picture would be even worse.

There comes a time, as many investors know, when you have to look at the holdings in a portfolio and ask yourself "have I really got it completely wrong?" and "should I just sell, take the loss and get the hell out of it?"

These questions have been going through my mind when I look at what happened to the total this week and compare it with this time last year. Admittedly we were at the peak of an unsustainable bubble and I had the fortune to be holding one of the beneficiaries but what has happened since is down to me and no-one else.

I have admit it and say that I have been gambling, I have been paying too much time looking at price movements, market fashions and the like with the end result being that I am out of pocket big time. The selection method I employ has a section on risk in which it says that "I do take risks, no equity base investment is without it but I don't like to gamble", sounds pretty hollow now. I have punting and not real investing, so now I will have to take some painful decisions, either stick with it and hope things improve or take what's left and live to fight another day. Not an easy one and not one I am going to rush into.

The micro chuffy experiment nearly got off to a bad start when it was announced that the link between childhood cancer and power cables had been established. The portfolios holding in National Grid took a dive but recovered, it just goes to show that even the most solid of companies can also give you the roller coaster treatment!

The Portfolios

The portfolios were on coarse for a mild recovery until one of them went into free fall and by the end of the week the small gains of two of them were insignificant to the loss of the third.

The acorn portfolio scored a small gain when bottom fishers helped to lift the price of Imagination Technologies back above the £1 mark after their recent collapse. On the other hand, Chorion slipped again but not enough to affect the total.

The spartan portfolio had a better week as well. Nearly all the holdings scored some gains with the US funds doing most of the business. I have just increased the holdings in the Witan Investment Trust and the Premium Bonds account.

The pensions portfolio has dived again in dramatic form this week. The culprit was the holding in the internet company, First Property Online. The share price went into free fall as the market has lost all confidence in the business. The goings on at Yahoo! in the US didn't help but the company doesn't exactly help itself either. I will have to make up my mind soon as to what to do with this holding, the company is practically trading at net cash value but in the dot com business this can't be relied on as a cushion for further falls. I also will be making this years payment into the pension fund and I was considering investing more cash into the company but now I feel that's out of the question.

News and Comment

Another week another loss, although this time around its hardly surprising given the fact that anything bar cash is heading south. Although I am losing money faster than I could ever earn it I am not too concerned unlike a few months ago. The big difference is that I have come to terms with the fact that last year was a gamblers paradise and I fell for it. The money that I have lost has been the paper gains that I made during that period. I hurt parting with these “profits” but it took that kind of a lesson to teach me to get back to basics.

Rather than spend the week watching my capital disappear I have been reviewing my current holdings and researching companies as possible additions. The mid term review I am carrying out is purely to assess the current position in business terms and to ignore the way the market views them. I have been concerned that I have shackled myself with short-term bets rather than long-term investments, if the conclusion I come to is the former then the holding will be sold, even if it means taking the loss.

I have removed Lastminute.com from my watch list but it has nothing to do with the way the market has turned its back on Internet companies. I originally was extremely sceptical of dot coms but thought when the price of LMC had dropped from its ridiculous peak value to around £1.50 it was approaching good value. The company still has plenty of cash in the bank but is still losing money badly. The reason for my loss of interest is that the margins they are working at are nowhere near as high as they could be given the so-called low overheads. The business will always need to spend heavily on advertising and will never probably achieve pre-tax margins of more than 10%. They have been pragmatic in signing up with Thomas Cooke for late bargains and the new site is far easier to use than the old but without the margins I am not interested.

The micro chuffy portfolio has taken a pounding in the current climate but I am not too concerned as the fund only has one share. The next investment has already been identified and I am hoping the price will fall before I make the purchase that will probably be in April. This new project has really been the catalyst that has brought me back down to earth and quite frankly re-kindled my interest in investing. Although the sums are relatively small, at the moment, I am finding it far more enjoyable than the main portfolios.

The Portfolios

This week has seen another major drop in the portfolios values. All three fell but the main offender of the last couple of weeks actually recorded the smallest fall.

The acorn portfolio backtracked again as both Imagination Technologies and Chorion took a pounding. Chorion have their results due out on Monday and I anticipate further news on their demerger plans.

The spartan portfolio retreated across the board but no more than I expected. In fact I am hoping that things will stay like this for some time because I drip feed funds into the portfolio it means I will be able to purchase more units/shares each month. The news coming out of Japan has really hit the Baillie Gifford Trust but because I see this as a long term venture anyway, the more it falls the better.

The pensions portfolio scored a slight loss as First Property Online again slipped. I am closely monitoring the situation at FPO and to be honest I am beginning to regret my decision to remain a holder, but my final decision will appear in the mid term review.

News and Comment

I have never actually experienced the delights of downhill skiing for the simple reason that I have always considered it too dangerous. But after watching what’s been happening to the Chuffy totals over the last few weeks I think I have a pretty good idea but without the expense of the ski equipment! Even so, I was fully expecting the turmoil to have savaged the portfolios to a greater degree than it did and so it was quite a relief when I updated the spreadsheet to find out what the actual loss was.

How long it will be before the markets regain their nerve and buyer’s return will be anyone’s guess but it definitely won’t be until prices reach a level that contain “value”.

I have removed Baltimore Technologies from the watch list page but not because of the events of the last couple of days. I added them in the first place because of the growing acceptance of their security software by the growing number of e-businesses. My reasons for their removal are:

I am slowly adding more of the companies that I have been following and the aim is to build this section of the site to hold about 30.

The mid term review that I have been carrying out on my equity holdings is nearing completion but the holding that has the major question mark hanging over it is the one that is giving me the biggest headache. I should be able to get the final pieces of information together and make a decision by the next update, either way there is a bullet needing to be bitten and I can’t say I am looking forward to it.

The Portfolios

The portfolios took the inevitable pounding this week and all three active funds dropped but it wasn’t all bad news.

The acorn portfolio fell as the price of Chorion took a hit on the back of an “excellent” set of results. The company reported increased profits of £9.5m and reported good growth in both divisions, but the news that the Intellectual Property division will not be ready for separate listing disappointed investors. Imagination Technologies actually rose, which was quite remarkable considering the beating other high tech stocks took.

The spartan portfolio retreated as all but one of the holdings fell. The largest holding, Ivory & Sime ISIS Trust, eased back even though the company bought back and cancelled over 100k of its own shares. The Baillie Gifford Japan Trust rose strongly as the Japanese market rebounded after the major falls in the last few weeks. It will be interesting to see if this keeps up, I hope it doesn’t because I want to increase my exposure but over a long period.

The pensions portfolio registered another fall as the holding in First Property Online slipped once more. I have winged a fair bit about this situation and in the next few days I will be able to settle the issue as to whether or not I will continue to hold. The problem I have with the company is not the falling share price but the lack of news and activity. The business was reversed into Hansom Group back in December, so it hasn’t really had much of a chance to prove that their business plan is working. The plan very much depends on bringing industry partners on board as fellow shareholders in return for using and marketing the service. There are two reasons why this situation has to come to a head; first is that I don’t want to sit around and lose even more money when I could admit my mistake and take the loss, second is that I will be investing this years pension allowance and I might follow my usual tactic by backing FPO and purchase some more, so long as the feedback is favourable.

News and Comment

As the weeks go by and this Bear market continues the more I take heart in that things will get better. It may seem an odd thing to say and it may have something to do with my current love affair with Stout, but it has to said that prices are in some areas beginning to reach levels at which money can be invested with a view purchasing equities at a reasonable price.

It will also never cease to amaze me that when prices are approaching these levels that investors/savers are reluctant to put money into the market in the form of ISA’s etc. This time last year they couldn’t wait to slap the cash on the table when prices were over the top, but this time round if you mention the stock market people look at the ground and change the subject pretty quickly. Although having said that, I invested a fair amount of cash at the peak and have taken a pounding since, so I am hardly qualified to criticise.

This week the totals took another hit but the picture was mixed, with heavy isolated losses rather than the across the board thrashing that has been characteristic of the last few months. It has taken some time but I have come to terms with looking ahead to the future rather than keep looking back and thinking what might have been. The performance charts tell their own story as to how the current Bear market is destroying the value of the portfolios and how much it has taken me off the not so optimistic targets that I set at the end of last year. It is not much consolation that if had invested in a FT All share tracker then I would have been marginally worse off, it is also not exactly comforting to know that if I had got out when the market was at its peak and invested the cash in a Building Society then the totals would be at over £500k. I thought I had stopped kicking myself but it wasn’t until this week that I finally had and began the business of picking myself off the self-pitying floor.

I continue to add to the watch list which is beginning to resemble a “rather boring collection of safety stocks” as one visitor put it, but as I said last week I intend to increase this list to 30 stocks and this will take some time to transfer all of them to the site and it has been a case of picking the contents at random from my database.

The one thing I miss about the 1980’s is Lord’s Hanson and White when they were at their best. Anyone who was lucky enough to be around to in invest in or watch those exploits will know what I mean. The reason my mind has wondered off to those times is that the buccaneering exploits that they unleashed make today’s skirmishes look pretty dull to say the least. On a more serious note, another thing I regret that was that UK PLC never picked up when they were around was their refusal to reward failure when it came to management bodging up. Nowadays it is quite normal for senior management to wreak havoc on a company and walk away with a lump-sum payment including a pension!

Although its easy to point to a sector and say, “I told you so” when things have gone wrong, the telecoms sector was one area I had no intention of investing in last year when all the pundits were predicting a never ending story of growth of profits and a never ending army of consumers. The reason I didn’t join the throng and still avoid the sector now is that I consider it a “commodity business”; the days of companies being able to charge above average rates with excessive margins are receding. Add to this the ever-growing capacity being generated by new entrants; you have all the makings of stagnation on the horizon.

The Portfolios

The portfolios have had a mixed performance this week. On the whole it hasn’t been too bad but the havoc wreaked by the market on two of the holdings has lead to the totals taking a bashing again.

The acorn portfolio took another bashing as the market marked down the price of Chorion after its decision to delay the demerger of its Intellectual Property division. The company is now undervalued but in these conditions, but that’s not too surprising.

The spartan portfolio scored a gain as most of the holdings clawed back some of the losses from the last few weeks. The major mover was the Ivory & Sime ISIS Trust but considering that this was one of the poorest performers since the start of the year it will have to do more to get back to square one.

The pensions portfolio dropped again as the holding in First Property Online slipped once again. I have been pondering over the last few weeks what I am going to do with this company. The market has completely turned its back on dot coms and quite a few are trading at or below the cash values in their balance sheets. I am still in two minds what to do; I have made numerous enquiries to the company themselves and others in the industry. This comes at a critical time for me, as I will also have to decide where to invest this years pension allowance.