Friday, September 22, 2006

Go, Morrison!

Currently trading at 245p. I bought in at 184p. Woo!

Three month chart

The question now is: when would it be prudent to sell?


Andrew Ferrier said...

Congratulations. But now's the time. Sell, sell!

But on a more serious note, why do you share-trade? Is it the fun? Are you trying to make some cash? Is it a hobby?

I've always been a bit suspicious of amateur share-trading, because we've seen those oft-quoted statistics that even professionals don't do much better than trackers/random machines/etc. So do you struggle? Do you feel like you know what you're doing or are you dabbling?

I'd love to hear your experiences.

Richard Brown said...

We should have a chat (or perhaps I should blog about it :-) )

My investing story has been:

* Identified £9000 that I wouldn't need for over a year so thought I'd see if I could do better than a savings account.

* I didn't follow any methodology and chose my allocation rather haphazardly. My reasoning went as follows:

* I want some exposure to the UK market in general, I want some non-UK exposure and I want to make a big bet on a single stock.

* Given that my pension seems to track the FTSE, I only allocated £1k to a FTSE tracker.

* I allocated a third to overseas. At the time, Japan and Germany were beginning to emerge from their slumber. I think the Japanese PM was pushing through his Post Bank reforms at the time. I liked what I saw so I chose to put the money there.

* As for the big single-company investment, I realised that the only industries I really understood were IT and Retail (the latter because I go to shops and hence know which companies are any good and because a friend used to be a senior manager at a retailer and so I had an idea of how they worked). Given that I have so much human capital tied up in IT, I figured some exposure in retail instead would be wise. To narrow the field, I decided to limit my focus to supermarkets. This made things easy: nobody had a bad word to say about Tesco.... it was safe to assume the price reflected the optimism. The only way was down. Sainsbury's..... was beginning its revival so was an option. Waitrose - not an option. Asda - I didn't want to be exposed to Dollar fluctuations by buying Wal*Mart. Morrison's - nobody had a good word to say about them.... I figured all the bad news was priced in and that good news would be a nice surprise... therefore there would be some upside.

* So, the choice was Sainsbury or Morrison. I was concerned that my Japanese bet was already too late
(positive things were already appearing in the press). So I thought I'd "catch" Morrison before the good news started to arrive

* And that is the entire sum of my thinking. Probably dangerously simplistic - and I was underwater for quite some time (there *Was* more bad news to come out of Morrison's) but they do now seem to have turned the corner.

* I haven't touched my investments since I completed my purchases. I know I need to get round to reinvesting dividends but haven't done that yet.

Andrew Ferrier said...

OK, most of your comments about particular companies/industries/etc. seem to be rational, in so far as I've analysed them.

But: lots of folks know that stuff too, right? Which begs the question: why do you think you'd do better than a tracker?

And yes, I do thing you should turn this into a blog topic :)

Richard Brown said...

But: lots of folks know that stuff too, right? Which begs the question: why do you think you'd do better than a tracker?

The Efficient Markets Hypothesis would suggest your suspicion is well-founded.

I suspect the prevalence of people claiming they can pick stocks is entirely due to reporting bias. On average, some will get it right and some will get it wrong. Those who get it right (me, on current prices) will want to tell everybody about it. Anybody who invested in that hedge fund I blogged about will be rather quiet right now.

Now let's assume I don't sell and Morrison's goes bust. I suspect I'll be entirely less vocal in my discussions :)