Wednesday, 29 September 2010

Who dares wins!

What a morning! Three wasps found their way into our bathroom. Our children have been a bit freaked out by a wasp infestation in our roof. No-ones been stung but every other day they find a dead or half dead wasp in one of their bedrooms. I didn't want to leave the wasps for the children to find so had a mad five minutes trying to wack them, hoping I didn't wake anyone up and that I wouldn't miss my train.

Made it into Edinburgh and was unconcerned about the pouring rain until a bus swerved towards the lane next to the pavement and hit a massive puddle dead centre! I've laughed at people getting soaked in similar ways on TV. never expected to get caught myself.

Drying out before work, I decided to cash in some shares that had jumped 20 percent this morning. CAZA oil released positive news. Only, I got greedy. I though the shares would rise higher than 34p before re-tracing. I set a stop loss at 36p only to watch the price start to slip back, 33p, 32.5p. I then tried to sell and couldn't until 30.5p. Almost as soon as I'd sold, the price moved up again. I eventually decide to buy back in but even that seems to have been a mistake as the share price is now drifting South once more!

I'm in admiration of other traders who seem to read the signs correctly, selling near a peak, then buying back into a share they trust has a long term future once it has gone back down. If done well, one can increase their holding in a share substantially which results in greater profits in the long term.

I still have a lot to learn, especially about discipline! Still, I can't help setting new goals. Thinking about the plan to earn a million in ten trades, I realised I had not factored in tax or fees. I would want to spread the risk as well and so would pay more in fees as earnings increased. Level 2 share dealing would probably be neccessary after a while and it is slightly more realistic to imagine doubling value over a year, rather as over a single trade.



Year Start Value
Fees
Level 2
Tax
Year End Value

Start of Year 1
£1,000
£40
£0
£0
£1,960
End of Year 1
Start of Year 2
£1,960
£40
£0
£0
£3,880
End of Year 2
Start of Year 3
£3,880
£40
£0
£0
£7,720
End of Year 3
Start of Year 4
£7,720
£80
£300
£0
£15,060
End of Year 4
Start of Year 5
£15,060
£160
£300
£1,012
£28,648
End of Year 5
Start of Year 6
£28,648
£160
£300
£3,730
£53,106
End of Year 6
Start of Year 7
£53,106
£320
£300
£8,621
£96,972
End of Year 7
Start of Year 8
£96,972
£320
£300
£17,394
£175,929
End of Year 8
Start of Year 9
£175,929
£320
£300
£33,186
£318,052
End of Year 9
Start of Year 10
£318,052
£320
£300
£61,610
£573,873
End of Year 10
Start of Year 11
£573,873
£320
£300
£112,775
£1,034,352
End of Year 11

It is still a dream goal but who dares wins, right?

6 comments:

  1. I don't think this is a good goal Mark.

    I also don't think you should be in admiration of the traders who mange to succeed in the way you've described. No-one can second-guess the markets perfectly every time - that's like the gambler who thinks he's on a winning streak until he loses everything. Those that do succeed - when they succeed - are usually only doing so at the expense of someone else who either guessed less accurately or was just unlucky. To me, this is the seedy side of the stock markets and doesn't represent a healthy or Christian attitude towards wealth.

    As I've said before, I think long term investment is needed in useful projects, but what you're talking about here appears to be motivated purely by the desire to get rich quick at someone else's expense.

    I'll stop preaching now... :-(

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  2. Hey Dan, my wife agrees with you! What am I to do? Come up for a weekend and we can have a good discussion together!

    I value your comments. I certainly need to hear different perspectives. The systems course I've been studying recommends the interpersonal action-learning cycle where I acknowledge that I need to listen and offer my understanding of what you have said in the hope that you will clarify and we can move towards understanding each other better.

    I hear you say that you feel gambling and speculating are not good.

    I hear you say that you feel that to make a profit at someone else's expense is unhealthy and not in line with Jesus teaching.

    I hear you say that you feel long term investment is appropriate for useful projects. I am not sure what you mean by useful projects.

    Have I heard you correctly?

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  3. Hey Mark, my wife says to tell you that she agrees with your wife! :-)

    Yeah, I think you're pretty much hearing me right.

    In terms of "useful projects" - well it's a bit of a subjective thing I guess, but I would like to feel (as I think you would?) that my money is being used in a way that will generally be of benefit to the world. So on the negative side I wouldn't want to invest in the arms trade or the tobacco industry for example. On the more positive side it might be good to invest in a company that builds wind farms or promotes fair trade. Obviously there's a lot of middle ground in-between those 2 extremes.

    It would be great to see you guys again some time! - we'll have to see if we can arrange something soon. :-)

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  4. Hi Dan,

    You guys are always welcome. I need to get a job before I can plan any time away but when we can make it down we'll try and meet up.

    Okay, stage two of the interpersonal action-learning cycle.

    When I interviewed for my first contract job which was going to take me out of a permanent role, I was asked why I would leave a permament role. My response was to say I'm not risk averse. I justified that statement by explaining I took my family to Central Asia. I was offered the role so I reckon they didn't hold that against me!

    I enjoy penny poker, I see it as a chance to spend time with friends.

    I climb, I hunt, I enjoy driving fast. I am willing to take risks. I've come to realise that this is part of my personality.

    As far as gambling and speculating go, I have to say that all things are permissable but not all things are beneficial.

    In order for me to make a profit, someone else has to give me their money. All business is the same. If I buy a coffee at Starbucks, I pay £1.90. The same coffee at a cafe two doors down costs 95p. I happen to prefer Starbucks but while I would rather pay 95p, I don't resent Starbucks trying to make as much profit as they can. Is it ethical? Am I wasting my money when I buy something that costs more than the value price?

    But that is probably a distraction. I see buying and selling shares as a business. I do get emotional and make rush decisions but am committed to becoming more professional in my decisions.

    I'm currently invested in AAZ, Anglo Asian Mining. I researched the company and believed when I first bought shares that this is a company that is growing in stability and stands to make a decent profit. I did not buy those shares intending to con anyone out of money. I hope that no-one lost money by selling me those shares. But, in the discussions we have had, I've had an unease about your use of the terms gambling and speculation. Initially I accepted them but I think this is because you are a friend I trust and respect. I believe that buying and selling shares is risky but is not immoral. I am not making a profit at someone else's expense. I am buying a share in a company I believe is worth money and I sell that share because I wish to make a profit or cut my loss. That in my view is a business decision.

    For the past seven years I have paid a monthly sum into an ethical fund to save money for my children. This spring I checked the value of the fund and found the fund was worth less than the money I had paid in.

    Is it ethical for me to save money for my children's future and to allow those savings to be worth less than if I had stuffed the money under the mattress?

    I decided to withdraw the savings and have since invested the money myself. In a few short months I have generated a profit.

    I would love to save for the future by investing in ethical projects. My suspicion is that the only way I can guarantee a project is ethical is if I invest in it directly and become involved in the companies I invest in, or if I establish the company myself. But, if being ethical means making a loss, I can't afford to fund that.

    What are you invested in?

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  5. >> I am buying a share in a company I believe is worth money and I sell that share because I wish to make a profit or cut my loss. That in my view is a business decision.

    And that sounds to me like an investment, and probably a medium to long term thing (I realise I'm not being very specific here about time scales but I think you know what I mean?) However, this sounds to me like gambling:

    >> I'm in admiration of other traders who seem to read the signs correctly, selling near a peak, then buying back into a share they trust has a long term future once it has gone back down. If done well, one can increase their holding in a share substantially which results in greater profits in the long term.

    You might reap the benefits in the longer term, but the gains have been made very quickly, perhaps even in a split second. You've chosen to buy when other people have chosen to sell and vice versa and you've made money out of it and someone else has lost out. Nobody benefitted from this transaction except yours truly. At least with Starbucks someone gets a nice cup of coffee out of it! Also, these kinds of transactions are often not a good thing for the company affected. A company's value can be unrealistically hyper-inflated and then come crashing down again in a very short space of time on the whim of the market, just because everyone is trying to second-guess everyone else in order to make a quick win like you're doing

    >> What are you invested in?

    My biggest investment is my pension fund. It is an "ethical fund" although I haven't read the small print for a while so I couldn't tell you exactly what this entails. It lost value massively during the recent crash so that it was worth little more than I'd put into it. It has recovered quite substantially over the last year though. Who knows what will happen to it in the future! The main thing in it's favour, financially speaking, is that because it is a pension I get tax back on my contributions which also goes into the fund. This means that although the money that's gone in hasn't made a great deal, at least not all of the money that went in was "mine" in the first place! It also transpires that it wasn't affected by the recent BP scandal that affected so many pension funds, because it doesn't invest in BP because BP doesn't satisfy the ethical criteria!

    I also have a bank account and an ISA with Triodos. Triodos are an ethical investment bank who don't just avoid companies they consider unethical, they also try to invest actively in ethical projects. They send us a newsletter every now and again with information and stories about some of the projects they're investing in. The return isn't very good although I haven't compared it with any other ISAs recently - I think market rates generally are pretty low at the moment.

    I appreciate that you want to save money for your kids and also presumably for your own future as well, and it's difficult to find ways to do this effectively. I don't think you have to invest all your money in wind farms or whatever, but I don't think you need to throw your conscience out the window either (I'm not actually accusing you of doing that!).

    Investment isn't just about money though. Jesus had a few things to say about what kinds of investments were really worth while, storing up treasures in heaven etc. One day, Jesus is going to come back and put this sad old world to rights and when he does the investments that really count will be the investments in character, that come from making the hard decisions, that will prepare us for our role in His new Kingdom! This is true for your kids as well - they need to see this Kingdom modelled by you to help prepare them for their place in it.

    And I said I wasn't going to preach… :-}

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  6. Just to clarify - as Emma's pointed out - I should've said:

    "I also have a bank account [comma] and an ISA with Triodos" - the bank account isn't with Triodos, it's with the Co-operative Bank.

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