Sunday, January 02, 2011

Trading

Inspired by Capitalists@Work, and because I enjoy a gamble, near the end of this year, I decided to start a small trading portfolio. As regular readers will know, I used to have Apple shares, which did very nicely for me (bought a few years ago at about $70 and sold the last of them in May for about $290—in order to buy shares in the company that I work for).

In order to achieve this, I started putting a small amount away every month, paying into my account with my broker—who happens to be A Very British Dude. Compared to some dedicated trading sites, of course, he is a little more expensive—but given how short of time I am at the moment, I prefer the personal and proactive service that he gives me.

Having looked around at the markets that I thought might perform well, I thought that energy companies were the best bet at present—especially given this lunatic government's current Green obsession, and the severe danger of energy shortages in this country.

However, given the relatively paltry amounts that I was able to put in, I decided to look at the "juniors"—small exploration companies with shares priced, more or less, in pennies rather than pounds. After all, if a share priced at 4p moves up by 1p, then you're 25% up (ignoring fees).

I looked at various energy companies—including Ithaca, Chariot, ITM Power and XTract Energy.

But, at the very end of September, I eventually purchased Ascent Resources at 4.35p per share. Then, at the beginning of December, I purchased Xcite Energy at 258.9p per share. So, how have they done?


So, all in all, not a bad start to this little experiment. In 2011, I intend to strengthen my holdings in both Ascent and Xcite—as well as setting stop-loss positions for both—and start looking at other energy companies too. Having recently had a decent pay rise, I am also doubling (at least) my payments into the trading fund.

My plan is to use these small companies to build up some capital, which I shall then shift into "safer", dividend-paying shares: I shall then continue to plough more money into the smaller companies to build up more capital, and so on and so on.

So, let us see what the New Year brings...

10 comments:

Jiks said...

You are a braver man than me DK, to be investing anything in the market right now.

With suspicions like ...

"If the money to boost stock prices by almost $9 trillion from the March 2009 lows did not come from the traditional players, it had to have come from somewhere else. We believe that place is the Fed."

... floating around.

http://www.zerohedge.com/article/trimtabs-no-amount-qe-will-be-able-keep-current-stock-market-bubble-bursting-eventually

Anonymous said...

Dont forget about some of the Aussie stocks out there which will be producing rare earth metals.

Some good ones which are likely to folling in the likes of LYC

are

Arafura (ARU) and
Alkane (ALK)

all trading on ASX

Good opportuities for 2011

Ed P said...

Molycorp are a good bet. They control the main source of "Rare earth" Lanthanide-series metals outside of China, in California. These include Niobium, Yttrium, Scandium & Europium, all essential for modern electronics & especially for electric car batteries. As China are now increasing domestic consumption and limiting exports, the Mountain Pass quarry & works will undoubtedly be brought back up to full capacity, regardless of the environmental concerns which closed them down 3 years ago. If I had any spare money I would buy their shares! (I have no commercial link with this company, just a professional interest in metals.)

RAB said...

Have a look at the Parkmead Group. I bought them on Xmas Eve at 18p, they are up to 25p now.

Devil's Kitchen said...

Ed,

"Molycorp are a good bet."

I was recommended MolyCorp, and so I asked someone who knows this industry rather well: this was his reply (all simply personal opinion: not official)...

"They're a rare earth mine at Mountain Pass in California. Big stuff at present, given this Chinese choke hold over rare earths.

However, well.....they just did their IPO (initial public offering) and before they did this they were part owned by Goldman Sachs. GS selling out of something is not a good sign for long term profit really.

Secondly, they don't, still, really have enough money to restart production (they stopped a few years back for two reasons. One, Chinee comptition, two, they were leaking radioactive thorium into hte California desert. Not a major problem, but you can imagine how the hippies that run Ca react to that). They can produce rare earth concentrates, but not the separated rare earths that everyone wants......and the mine is heavy in the light rare earths, light in the heavy rare earths anyway, the heavies being where the money is.

Me, personally, I think this is a rally on the basis that surely, surely, the US govt is going to do something to restart rare earth production in hte US. Mebbe they will and mebbe they won't.

But Molycorp is a bet, (as I insist on saying, in my personal opinion) on the US political reaction to rare earth shortages. It's most certainly not a bet on the intrinsic value of that mine.....which doesn't in fact have muc intrinsic value. If it weren't within the borders of the US I seriously doubt anyone would give it a second look.

Hmm, that all looks a bit harsh. But I was doubtful at $12....at $50 I'd be thinking about shorting.

Umm, dunno. There's certainly momentum, there's certainly interest, there's certainly a "story" to tell about it. Those might all make money (they often do, after all). But the mine, considered purely as a mine, no, I don't think it's worth that."


DK

Jackart said...

Thanks for the mention! XEL is certainly doing well...

Fingers crossed. I have a good feeling about 2011. Happy new year!

Techno Mystic said...

I started a modest portfolio around 2006. It is concentrated in Exchange Traded Funds to spread the risk.

It was horrific to watch it when the stock market crashed, but the dividends were always being automtically reinvested, so more shares were being purchased at the low prices during the slump.

Now all indices have been heading upwards again. Only my FTSE100 ETF is still showing a loss.

Since I am excluded from owning a home due to high property prices and savings interest rates are so low, the stock exchange is the only option I have really, and it seems to be working out over the long term.

Skimmer said...

I strongly recommend everyone to stay involved in what you're pension is invested in too. Any private pension provider gives you allot of options, but will stick you in an ultra safe flat line fund if left to their own devices.

I'm in this since Feb & have been making out like a bandit http://funds.ft.com/friendsprovident/Insurance/FPFGE

Anonymous said...

Xcite should do ok provided they can control the capex and deliver first oil on time from their North Sea Bentley field. The main risk I see is that the brand new joint production and drilling rig they have contracted (still under construction) could be delivered late and or suffer teething problems at start-up.

Being a believer in inverse global warming, I put my small money in GM food stocks, factory farming equipment and energy utilities.

dbmaverick said...

hope you got your stop losses set up in time...I'm getting a hammering today on GKP