How did our trading tips do?
It's the final trading page of the year, so it’s the ideal time to look back and see how our tips have done, says Matthew Partridge.
This is the final trading page of the year, so it's the ideal time to look back and see how our tips have done. Below I've run through our closed positions (nine trades in total) and in the column on the right, I look at the positions we are carrying into 2018.
Starting in January, in issue 828 (20 January), we recommended that you buy Brent Crude oil at $55.43/bbl at £100 per $1. The trade initially went well, leading us to raise our stop-loss to $50.99 from $48.50 in issue 840. Sadly, the oil price then slipped back and the trade was closed out at $50.99 in issue 845, for a loss of £444.
In issue 832 (17 February) we tipped gold at $1,221 per ounce, at £7 per $1 move. After a mini-surge that saw it come close to $1,300, we ended up taking profits at $1,255 in issue 854, making us £238.
In issue 834 (3 March) we tipped pub group Mitchells and Butler at 250p at £4 per 1p. We also went short on rival group JD Wetherspoon at 975p at £1 per 1p. Neither trade did particularly well, unfortunately. We closed out our Mitchell's position in issue 862 at 242p for a loss of £32. Similarly, we also made a loss on our Wetherspoon's short, closing it out in issue 845 at 1,025p for a loss of £50.
Issue 836 (17 March) saw us short online retailer Ocado at 249p at £4 per 1p. This also ended up doing badly, losing us £132 when we closed it out at 282p in issue 864. However, our tip that you buy infrastructure group John Laing Group at 260p at £1 per 1p in the same issue would have made you £180 if you had closed it out at 305p in issue 862.
In issue 838 (31 March) we suggested you buy challenger bank Virgin Money at 318p at £3 per 1p. Frustratingly, this was another loser and we cut our losses in issue 862 at 270p. This meant that we ended up £144 in the red.
Issue 840 (14 April) saw our most successful trading idea to bet on French stockmarket index the CAC 40 at 5,099 at £3 per point, with instructions to close the trade four weeks later (after the French election). By the time issue 844 rolled around, Emmanuel Macron had won and the CAC 40 had risen to 5,399. This gave us a profit of £900.I have also decided to close the trade on Barclays that we made in issue 856 (4 August) at 206.25p at £10 per 1p. It is now at 199p, which works out at a loss of £72.
In all, just three of our nine trades (gold, John Laing and the CAC 40) made money. But thanks to the profit we made on the French trade, as a whole, our closed trades for the year made a profit of £476. The average trade has been held for 20 weeks, with the longest position being 28 weeks for Mitchells and the shortest being four weeks for the CAC 40.
The bets we're holding for 2018
Putting Barclays aside, as I'm now closing that trade, we're going to be carrying over six trades into the new year. Here's how each trade is doing so far, along with my rationale for continuing to hang onto them.
Since I suggested that you buy spread-betting group IG Group in issue 846 (26 May), it has gone up from 570.5p to 676p, making us a profit of £211. We're still awaiting word from Brussels of how spread betting will be regulated in future, so let's hang on to this one for now.
We tipped the US ADR of Brazilian oil giant Petrobras in issue 850 (23 June) when it was trading at $7.83. It is now trading at $9.74, bringing us a profit of £238.75. Yet it still trades at a discount of nearly 25% to net assets, which looks good value to me.
French car manufacturer Renault was tipped in issue 854 (21 July) at €82.90. The share price is now €84.49, a profit of £79.50. It trades on just 5.4 times earnings, which makes it another value play, and one well placed for a stronger eurozone economy. In the same issue I also recommended you short electric car-maker Tesla at $329.30 because it is quite simply overvalued.
While the share price is essentially unchanged at $328.91, the latest indications are that it will continue to lose money in 2018, and will face strong competition from other firms developing electric vehicles. Stay short.
In issue 858 (18 August) I recommended AA. It has fallen from 206p to 157p since, which means we are losing £242.50. Yet trading at just 7.2 times 2018 earnings, it has plenty of upside recovery potential.Finally, in issue 864 (29 September) I suggested shorting Facebook at $164.46. It has since risen to $179.94. At £24 per $1, our position is losing £371.50. However, high valuations and increased regulation mean the surge could be set to come to an end.
Overall, our four longs are in profit by £284.25, while our two shorts are losing £366.84 a total current loss of £82.59.
What to do about bitcoin
In issue 866 (12 October), I suggested it was time to think about shorting bitcoin. However, I cautioned that you shouldn't do so until it had fallen below $4,100 per coin, as it was possible that the bubble had a bit longer to run. It's a good thing that I did so because it kept on surging, passing through the $10,000 mark, and now stands at around $17,000. However, I still think it is a bubble which could pop at any time.
Indeed, the collapse could come sooner rather than later. One reason for bitcoin's popularity is that it is seen as an anonymous way to make purchases. This is why, before its recent surge in popularity, it was frequently used for transactions of illegal goods and services.
However, as several experts have pointed out, if you wanted to remain anonymous, bitcoin is the last thing to use. Indeed, bitcoin retains a record of every transaction and can in some circumstances be linked into a user (why is why banks are so interested in the technology).
Governments around the world are already going through trading records to work out who has made huge profits from trading in bitcoins, and if it has been used to facilitate money laundering or illegal activity. The Internal Revenue Service in the US is already cracking down on suspected bitcoin tax cheats, while both the UK and EU say they will be taking similar measures. Once people start being prosecuted you can expect to see the price of bitcoin tumble.
I'd therefore suggest you take out a stop order that will allow you to go short at 50p per $1 when the price falls below $7,900 (the 50-day moving average). If that trade triggers you should cover your position (ie, set a stop-loss) if it goes above $8,900.