2007: VOLATILE BUT PROFITABLE!
Goodness me - that was an interesting old year! As they say in football: a game of two halves. The first half was a lot easier than the second! But when all is said and done it's been my best "taken profits" year so far.
It was pretty easy to make money until July-ish; especially in property companies which powered ahead. I think most traders/investors felt they were on top of the world as the profits piled in. Then it was all change as the new words "credit crunch" and "sub prime", seemingly from nowhere, came to hit puzzled investors. And the market slumped. And a lot of investors and traders were caught out because a lot of the drops happened during the summer holidays.
Some people, judging from the ADVFN bulletin boards, simply got wiped out - and many made the mistake of trying to find the bottom of shares like Northern Rock instead of leaving well alone. I don't pretend to understand economics, I just try and follow the market as it changes and I bailed out of property companies taking some reasonable profits along the way. And thank goodness I did as in the second half of the year property companies bombed with many down by 40% or more. The best property profit for me was Quintain Estates.
Also the small cap shares started to get hit indiscriminately as some pension funds began to bail and investors took fright. The share prices of a lot of really excellent companies got slashed. A lot of the problems came from pension funds and institutions baling out of the small caps. And when they bail out prices really get hit.
The good news for next year is of course some prices have well overshot to the downside and I intend to be picking up some bargains!
Although I didn't get out of my small caps right at the top I did get out of most of them with some pretty excellent profits. Some excellent small cap profits for me from the likes of Renold, Carclo and Gyrus.
Strangely enough the latter half of the year made me the biggest profits by simply having to close positions and also from seven shares I was lucky enough to hold that were bid for. The bids came in one after another. My biggest winner on a bid was Burren Energy held from 241p. The bid came in at 1230p! A nice Xmas present! Out of my portfolio, Sondex was bid for too as were Foseco, Broker Network, Domestic and General and the most recent one - MTL Instruments - just last week. It goes to show if you can find cheap shares, you have a better chance of it being a bid target.
I'm hoping for some more bids for 2008!
Now to my cock-ups of the year...These came from either ignoring a stop loss or simply gambling. Note to self for next year: stick to stops and don't gamble. I lost a lot by ignoring a stop on Morgan Sindall. And I lost with a silly gamble on Marchpole. And I made some losses on trying to buy one or two small caps back too early. As usual I try and learn from these mistakes. Of course it's never going to be possible to trade or invest without taking some losses. The trick is to ensure the losses are much smaller than the winners; something I managed in 2007.
I never managed to get out my profits right at the top or take my losses at just the right time either. But with some careful management I made a very tidy sum this year, my best ever.
I suppose in the end it was a year of big gains for oil and oil services companies and of course mining. Lucky for me I was in oil and oil services quite heavily and expect to remain so for the first part of 2008.
In hindsight, here are two trades we all should have made! Cairn Energy bought Jan 1702 and sold last week at 2649! Rio Tinto could have been bought in Feb for 2620 and sold last week for 5041! And what would have been the best bet of the year? Yes you guessed it! You could have shorted Northern Rock at 1210 and be taking massive profits now at 100! Wow!
I'll be back early in 2008 with a look forwards to a year which I am surprisingly optimistic about... for some sectors only!
Have a lovely Xmas and New Year, forget about shares and enjoy a brilliant time with your families.