The background trend is healthy enough, with the FTSE 100 heading back up towards the 6000 mark, but it looks like I bought Europa Oil and Gas (LON:EOG) at a premium, at 40p. Wichford plc (LON:WICH) is bogged down at 7p and Snacktime, oh Snacktime (LON:SNAK), I thought you were a Lion Bar at 114p, not a Curly Wurly at 104p.
It’s a tricky game picking a winner and one not for the fainthearted. I did some reasearch but effectively bought EOG on impulse, having looked around for a suitable oil company for a couple of weeks. Trouble in the Middle East colliding with rising energy prices seemed to strike out Arabian hydrocarbons. Throw in the current unpopularity of atomic energy and the cocktail of influence should favour an operation like Europa. Enter the Chancellor with his latest brainwave, a windfall tax on oil, oh how brilliant.
When I bought Europa I was excited, I had read an interview with the CEO and Proactive Investor didn’t have a bad word to say about them. Reasonable volatility promised the chance of a swift return and the trend that day was upward. The very moment I bought them, this ended. It was as if everyone else had read the interview and registered the same set of influences before me, snowballing the share price to 40 pence, and, like a relative who's all front room and no back parlour, we haven't been back there since.
Impulse is like throwing a dart blindfolded, you don’t expect to hit the bull's eye, but half expect to get on the board. Looking at the chart, I couldn’t have timed my deal better, if the idea was to buy high. I hit the bull's eye there alright. I began to wonder if we had all been neatly played by a well-timed piece of PR.
You do hear stories of price manipulation and the real pros understand, for example, what’s happening if a MD buys or sells his own stock. For reasons I don't fully comprehend, it matters if that director is coming up for retirement, or if he/she’s a young buck. This kind of background information is grist to the mill for professional investors. This is where research and intelligence come in and there’s a lot of money in that alone.
I haven’t got this far into it and unfortunately the results speak for themselves. I don't have enough of a stake to make sense of paying for professional research so I stick to some basic rules, such as; don’t put all your eggs in one basket, don’t chance what you can’t afford to lose and Warren Buffet’s somewhat counter intuitive rule, never take a loss.
This might seem a bit glib - nobody wants, or plans, to take a loss - but you have neither a profit nor a loss until the deal is closed. So don’t sell until you have a profit is his message, however long it takes (assuming the company doesn't go belly up). This requires that the investor's hand is not forced by circumstance, so only money that is not needed qualifies as a useful stake. This said, our emergency fund was severely depleted when Jane wrote her car off in January, so I am playing a little bit fast and loose within my own rules at the moment.
The spring days are just beautiful and I’m stuck inside doing a design review for the new Commonwealth Games stadium in Glasgow. Ho hum. I should be out on the bike.
Happy Birthday Hack.
