Baillie Gifford Us Growth Share Discussion Threads

[ben gunn] 30/4/2009 10:07

As we reach the end of April the strength of equity recovery in US is breaking new bounds.Here in the UK the Media sector index has broken up into positive returns for 2009 whilst the All share is still off some 6.2%.

Will post positions when month end perspective fully available as this all seems a bit early on fundamental grounds.The other leading index-SLXX is up over one month but strongly down over 3, 12 and, of course, 36 months.

Tested alternative strategies during rally. Results will be posted once discussed elsewhere for usefulness.

[ben gunn] 28/1/2009 14:29

The DOW is showing renewed strength on the back of the Obama/$852 bn. quantitative easing bounce. This has led to a rise today in British Land (as a for instance) of 6%.
We have lost money on the DOW trades but made good money on shorting UK Commercial property companies for 3 weeks including £3.3k on one trade alone.

Looking back at serious matters:
a) Last year we achieved a 16% gain for the Direct portfolio which falls to 11% rolling 12 months to the Barclays reporting date of 12 Jan as the currency gains melted away.
b) The govt bond bubble at the end of 2008 has landed with a thump but even the UK longs (which got no currency change benefit) have remained in hold territory. Financial Journalists have railed that the govt bond bubble has burst and corporate bonds are a must. This investor doent know why they say this as STAB broke through its stop loss on Jan 20th on its way to losing 20% and there is no upturn (from an investor's perspective) in the bond index. The substitution will be right in due course but the depth of signal to support it is not yet there.
c) The Trustnet sector by sector report shows that over a one year view only Overseas bonds, gilts and Japanese stocks have beaten risk free. We discount consideration of Japan as over 5 years it has not beaten risk free. This means that our asset allocation remains unchanged: gilts and O'seas bonds(now including Emerging nation bonds)
d) At the time of posting IBGS is a b, IBGM and IBCI are limit b's requiring rises of about 1.5 to become b's again, IBGL is a limit b needing a 2.5 rise and IGLT is a weak hold only. We are watching Corporate bonds closely and today's 12% boost in UK bank equities will generate some noise but we dont know if it will generate a signal.(No advice to retail Investors intended).
e) UK Gilt yields are now at 0.93% for 12 months and 3.6% for 10 years so it is hard to get excited about them unless we see severe deflation in the 20 years now seen as needed to tidy up the bankers crash. This means that avoiding losses and looking for premiums to the 1% available on risk free investments is what its all about. Turnover may grind to a halt.
f) Henderson may pick up New Star's mess so I shall go off and read their useful weekly report that came out Monday.

(Prediction of a possible low over the Jan Quarterly results season is now seeen as well wide of the mark as the Obama bank rescue is hogging the headlines over and above the week results from Main Street)

[ben gunn] 22/12/2008 13:15

The DOW's peaks on Tuesday 16th/Wed 17th gave us the confidence that the Friday morning high, up 165 points, might be "it" for now and DOW short positions were taken out along with sympathetic short positions in the main UK property companies.

Naturally, these will be closely monitored in the run up to 28th Jan. It is assumed that this 2009 reporting season will be the first post the NOV 2008 low when company results and forecasts can reflect the new stark realities. No one knows if this will trigger fresh lows but one posssibilty is for fresh lows:
Jan 2009,
July 2009
Jan 2010

One matter on the horizon for Private Equity is that the renewal dates for the major 2005 and 2006 leveraged buy-outs fall due,along with much else, in 2010 and 2011. This is going to challenge the liquidity of the markets further.

[ben gunn] 20/11/2008 10:08

The markets have produced a dramatic oversold position so it is reasonable to expect pure inertia to present us with a fool's rally. Consequently no short positions are being considered until shortly before the Christmas closedown when fears over the run up to January quarterly results may start to dominate.

In expectation of this rally our existing Euro Government bond positions are being maintained but re-positioning more to the longer dates as the short dated boom has become suspiciously bubbly and these profitable holdings are only reviewed at month end.
In the run up to 19th December when peak values will drive city bonuses we are buying a few oversold Asian and Brazilian Investment trusts for the expected 4 week bounce.

From 22nd December we remain extra cautious as weak banks may find the holiday season difficult. I am taking soundings how the Basel ll rules cope with banks reflecting their undrawn down company credit lines in their exposure to risk.

[ben gunn] 22/10/2008 19:41

Quarterly Results- DEEP CONCERNS

Just a headline entry to say that after Tuesday's weak Technology results and a raft of results today, Wednesday, the tentative conclusion is that this quarter will disappoint badly and so DOW is off 500+points half an hour before the close.
This weakness will trigger reduced confidence around the globe and it will be most worrying if end of trading Friday cant show a better % rally than last Friday on Wall Street.

[ben gunn] 07/10/2008 14:24

7th October update (before "the bell"):

As we now know the employment data was weak and as the global credit crunch became the global credit crisis as Mr Fuld had his toys taken off him by the administrator leaving various etfs in the awkward position of possibly losing their Lehman Bros index cornerstones. Wise investors have now learnt that exchange traded notes have a good deal more counterparty risk attached that exchange traded funds. Barclays capital please take note.

DigitalInvestors have been a bit on the sidelines since mid 2006 when they retreated from committed equity holdings towards cash and Govt bonds. below are the 12 month returns and buy/hold signals today for the key Govt bond etfs:

IBGS +15% Hold (i.e. todays DI signal)
IBCI +16% weak hold
IBTM +25% BUY (But severe $ worries)
IBGL +16% BUY
IBGM +16% Weak BUY
IGLT +5% BUY

Naturally it is important to admit that about 10% of these gains come simply from the collapse of sterling last autumn (which wont repeat in this manner and could well reverse)

The author finds all this bond and cash business quite dull though the side hedges in gold have been volatile beyond the norm with the Physical Gold etf not beeing the violent pricing nightmare that Randgold's low capitalisation has allowed.

Unlike Anthony Bolton who has been quoted as saying that bargains are now on the equity table I have positioned small short holdings in DOW and Google for the 29th September mini crash and DOW and 3i (before the ban) for the 6th October full blown global crash.
(If the Russian stockmarket falling 19.2% in a day and FTSE falling its greatest % in a day (almost 8%) isnt a crash then what is?)

Today, 7th Oct, is the day for rapid correction in emerging markets and perhaps interesting corrections in the DOW. Only 2 media stock shorts are maintained for the run through to Christmas.

Aside from leaving the battlefield on time with chips cashed the three learning points for me from the last 10 days are:

1. The 1.4% rises in Govt bonds yesterday were great but very meager for anyone looking for effective diversification of exposure to equities falling 8%.
2. If you purchase risk instruments (and they are rarely held for over 4 days) you will do well to buy them on Friday and sell them on Monday as long as your analysis gives you an adequate stear on the market's trend.
3. DigitalInvestors disparage consideration of Japan as it has underperformed for over 10 years. This is increasingly vindicated as the fall through 10,000 approaches.

Historical Note:
The etf SLXX is of no interest as a holding as it is for corporate bonds. These are a poor holding in a systemic downtrend since they both correlate with the trend of declining equities and are overweight property and financials which are tricky.
Thus over the last 12 months if you held SLXX you outperformed the 30% fall in the All Share as your fall was only 14% (say a 19% underperformance to Risk Free).
The mathematical reasoning behind diversification as a risk management tool may need re-analysis. The overlapping search for short term absolute performance and medium term relative out-performance may create a stronger risk management tool for all.
When we say stronger we are emphasising that the year's 55% outperformance of US Treasury bonds to UK holders compared to the All share's decline is real and darn right attractive to anyone in a hurry to build his retirement pot.

[ben gunn] 02/9/2008 19:31

2nd September Update
Since the last post:
1) June saw a savage fall in the DOW leaving it strongly oversold
(26 June TimingCube capitulated and agreed the DOW as a sell)
2) First half July saw a continuation of the weakness and the DOW momentarily dropped below 11,000.
3) Mid July saw a terrific bounce and the DOW has been above its 20 day moving average as much as below it ever since. This is a confused (but weak) signal with the index permanently below its 200 day but as often as not above its 20 day index.
4) August saw planty of volatility while the computers took over from the people on the beach. Timingcube made the US market a Buy once more arround the 6th Aug onwards but yours truely has been quietly £2 a point short of the DOW throughout....meaning that the account is almost wholely in cash as we await the confluence of signals.

Today saw the DOW well up 200 points early on with the yield on treasuries stumbling and then going into "freefall" off 5,6,7 points. The NAS led the DOW down and after the usual hesitancy at par for the day it fell 40 or more points into the negative.

Meanwhile the speculative froth was blown off Oils as Gustav missed the Mississippi and was cut to grade 2 and gold mysteriously slipped $25 or so despite the ultimate weakness in the DOW on this magic first day back after the extended holidays.

On the horizon we have important employment data on Friday5th Oct to be followed by positioning as we head into the October quarterly results season. Bad news from Dell at the end of August does not make the writer at all hopeful for a robust recovery and the short position may be raised.

[ben gunn] 02/6/2008 15:46

2nd June Update

After 10to 20 weeks of astonishing recovery in Equity markets it is possible that this short term trend will now melt away.
SLXX has given a weak sell signal and if this is confirmed with strength then we will outline a possible portfolio strategy for the coming summer. The DOW has not managed to hold above the 13000 level.

We stick to our medium term equity sell signal despite Timingcube recommending that equities are a short term buy. Truely confusing for now; should Timingcube re-join us then we will focus on further bond opportunities..

[abcd1234] 15/4/2008 16:30

Ben, meant to say by the way thanks for the response earlier

[ben gunn] 15/4/2008 15:59

Friday 11th April 2008
This may turn out to be the main turning point for Equity Investments. The trigger was The DOW's largest constituent- General Electric reporting profits below expectations and freshly reduced forcasts owing to weakness in its large Financial business. Naturally this is a powerful signal as:
*Early reporter in the quarterly cycle
*More US tipsheets have GE in their recommended list than any other stock.
*Global player of almost "conglomerate" status though with admired management

(n.b. remember that the DOW isnt weighted it is just the price of 30 leading shares added up)

Tactics are now fraught as my correspondents at Timing Cube have the markets as a sell (but have made a loss on this advice so far) but it is no way to build confidence in the turning point. I was away planting hedges in Wales on Friday (its that time of year here) so in anticipation of the 230 point fall that arose I replaced the full DOW downbet that I feel is appropriate at least until the DOW slips back to the conservative side of 11,000. (re-placed is a polite way of saying that on two occasions the main DOW short position was rapidly stop lossed out at no in-considerable cost so don't venture money that you cant cheerfully lose if at all)
This is still meant to be "only short 3 quarters in 30" but I do have a negative position in size in BSY as well with a view to clearing enough surplus to pay for the re-painting of my small property in France.

Meanwhile the Euro bonds and gold are performing more than satisfactorily and the final 1/3 of the cash released has been invested in a physical silver etf. At 14th April this meant a 13% return on the adventurous portfolio in the 15 weeks since Christmas compared to an 8% fall in the All Share.

My concerns that the lack of further interest rate cuts may soon make Euros unattractive has now been balanced by the independent-investor.com website noting that the poor UK current account balance alone may bring further sterling woe (accompanied as it is with the North Sea oil production falling off a cliff and precious little alternative energy sources being encouraged.)

Outstanding tasks: Bond hodings need to be rebalanced according to relative performance and more family portfolios to be brought into line with bond, bullion and junior oil strategy.

[abcd1234] 17/3/2008 16:56

ben, where do u get your level 2, for your trading on the us stocks ?
thanks

[ben gunn] 17/3/2008 16:54

dst
Try Ameritrade, I have a US $ account with them.

n.b. Looking at the weekly DOW pattern above.......the gap down overnight was taken out within 2 hours of the formal Monday opening of the market followed by a continued drift downwards. Classic pattern (not that I believe in daily patterns)

[dstanley] 14/3/2008 07:36

Trying again - please help even if it's to say that it cannot be done. Thanks

[dstanley] 13/3/2008 21:08

Trying again - please help even if it's to say that it cannot be done. Thanks

[dstanley] 12/3/2008 20:02

Please help - Is there any way a UK resident can open a trading account
to buy and sell US stock online? I would happily trade in dollars to avoid
currency conversions.
I currently use iDealing.com but the overheads are criminal and the choice
of stock is severely limited. Also they have no dealers available after 5pm.

[ben gunn] 06/3/2008 23:09

New Clarity New Tactics

After leaving the IG Index shorting account closed for almost 2 years it has been re-opened in order to short the DOW (March 2009) and BSKyB (Sept) and a couple of old favourites from the London market.

This is dangerous territory. Most sound short positions are for 4 days or less but I intend to run positions for over 4 months. I will not cover the stop loss tactics as I dont want to encourage others in this unhealthy pursuit but they are guaranteed and the positions are all paid for up front rather than on-tick. They, between them have already covered their spread costs.

The reasoning behind this gambling is simply that the disconnect between the apalling credit news and the resurgence in equities since mid Jan means that there is a unique opportunity to trade at attractive prices despite the bear market writing being all over the wall. Across the western markets prices have risen back above 20 day moving averages, failed to hold above 50 day lines and never got near to breaking back out above the 200 day line defense. The best proxy for what will happen in the next 3 months is to project forward the 200 day moving average of a preference share . i.e. downwards.

This week the resurgence on Tuesday pm and Wednesday (When I was at a Portfolio Composition conference) has been neatly and smoothly washed away. "Citi"bank is releasing fresh figures which will cause further despondency so the hour to act is now.

It is going to cost £16,000 to re-paint and re-roof the house in France that I bought in 1997 from profits on BSY short options so I need this gamble to come off before the end of the summer. I will also need the DOW to travel in a suitable straight South by South East line. The next 15% of equity falls may be short and sharp or long drawn out into the summer. Liquidity will become an issue in many markets and stocks like New Star falling by 8% today and Anglo Irish by 10% imply continuing tough conditions.

For now a balanced portfolio should contain gold, long/Indexed gilts, medium gilts and cash.

[ben gunn] 21/2/2008 13:56

NAS futures are still rising so I imagine that the "Canute like" retreat from 6000 will be followed by renewed strength which I expect to peter out before Friday night's close.
Possibly time to enter half the position today and half on Monday.

Update Monday 25th (lunchtime):
There was a weird leap up as DOW closed on Friday but gold was steady as a rock...we can expect the dithery trend of the first 3 weeks in Feb to be replaced by a clear downward path from this surprising level of strength. The surprising strength included another momentary visit of 6000 by the FTSE 100 here in London on Monday at 10.30 am..
Bolder people than me could benefit from this.

[ben gunn] 19/2/2008 13:37

FTSE has hit 6000 and the NAS Comp may well rise 40+ points today correcting the falls on Thursday and Friday last week.
I wouldnt read too much into these bounces. The only trends that matter are the movement after the month's main data (e.g. Wednesday pm) and the movement month end to month end.

[ben gunn] 09/2/2008 11:13

Hector



I'm sorry that my attempt to cut and paste the SLXX chart for Jan failed.
As I see it this(the sector etf for corporate bonds) is the key chart for this recession.
There is little speculation in this sector (compared to some) and so what you see is what you get......lower lows and lower highs.
The idea of a recovery It. is fine but the timing must be right.
I will invest 15% (approx) of my funds back into equities when lower lows and lower highs are replaced by higher lows and higher highs.
More of the portfolio will follow once this proves profitable for the second month and then the rolling quarter.

Gold is looking stronger as a hedge, oil is looking less certain.

[hectorp] 05/2/2008 09:44

I'm temted to take a long term view and buy a US recovery Investment trust.

[ben gunn] 03/2/2008 13:03

End Jan Update

Gold closed at $913.5.....What more can I say.

Mean reversion was minor on the NAS but huge for the DOW & S&P in the last week of Jan. This generated many false recovery signals in these markets since the moving averages have overreached themselves on the downside thus an apparent positive breakout by the indeces is shown. Apply caution during such volatility.

Jan has produced the equity index falls that we had expected for 2 months so the pressure is now off "leading signals" and onto "benchmark signals" such as the 200 day EMA for the NAS being roundly breached.

The big news story in JAN was the astonishing weakness in Sterling as G Brown's whole performance and stature crumbles. Some of our portfolios have benefited strongly in sterling terms from European positioning. Some have not.
The Barclays high risk portfolio shows a 2.5% gain in the week as small Oils bubbled up as well as the euro bonds benefitting from Sterling weakness.
Oils have now been sold and, of course, 2.5% rise in a week wont be repeated.

London Newspapers have been silent on Sterling's fall from 103% to 95.7% of its 2002 values,1.1/96.8 on Friday 1st Feb alone, (bar William Keegan). Why?

[ben gunn] 23/1/2008 11:55

Mid Jan Update

Nothing exceptional to report as last 6 days turbulance and the Fed's two panic moves have had a broadly neutral effect on bonds overall. The dislocation in equity market valuations is approaching the end of its first phase but as Timingcube only issued a sell signal on 4th Jan I dont expect to be re-weighting towards industrials for 12 to 24 months.
Long bonds have performed best which is a positive sign for overall size of the return expected from holding bonds going forward.

Whatever the governments do a recession is now upon us.Gold is quietly strong and should regain $900 by month end. Equity price bounces can be expected to be short term as the corporate bond price trend is firmly down.
(i.e.Equities and riskier corporate bonds can be expected to trend in the same direction.....but the corporate bond charts do it without the confusion of day to day noise and therefore are a more accurate guide to where the market is and its future course)

Anyone reading this who does not feel suitably positioned for a year or two of equity hell might do well to wait for a bit before selling. We might expect some mean reversion at month end. These large retracements may minimise the losses that people crystalise in switching out of equities into gilts "with a foreign flavour"

De-risking looks the best bet until equity and corporate bond markets regain their 200 day moving averages.