First foray into live investing
In the last few years I have gained an increased exposure to the world of finance. Now, after a year or so of managing a couple of virtual portfolios I decided to finally put some money in to real shares as investments for my future.
My initial contact to the finance was through not through a particular interest of my own but thanks to a few close friends. My interest in business had traditionally been focused at the operational level that I had been exposed to and was active in through my time as a Store Manager at Domino's Pizza and as a Supervisor in a student bar. At first, much of my friend's conversions went over my head (with me, at one point, believing Goldman Sachs to be one of the big four). However, after many questions and much patience from them I began to get to grips with at least the very basics.
In my final year at University, my close friend Alex introduced me to Investopia's Simulator. Essentially, you're given virtual money that you can buy and sell shares with. I genuinely learnt a lot and my attempts were moderately successful. That was, aside from buying into Apple near it's peak and watching the share price steadily tumble - although I did manage to offset this loss by shorting stock as it went. I'm hesitant to say I had, or have, a strategy. I simply trade after a news story breaks that made a share price spike or drop dramatically. I rely on market overreactions to news. Some basic research into the company generally identifies whether the fundamentals are sound and the market reaction was a mere blip. The greatest gain I had off this approach was buying into Toyota in October 2012 just after the company announced a global recall that caused the share price to suddenly drop. I held my shares and waited for the market to correct itself. It did, and that pick currently sits 67.25% up. Delightful. My initial belief of a revolution new way of investing was shot to pieces when Alex kindly pointed out that it was a well established strategy call event based trading. I took it as a victory that I was at least thinking along the same lines as some investors.
At first glance, my virtual portfolio currently looks pretty impressive. It's all green and there are some pretty substantial percentage increases. Alas, I am still far from calling myself the next Warren Buffet. My grass green portfolio has been significantly boosted by the bullish attitudes of investors over the last twelve months. Now, I find it increasingly difficult to find individual companies that don't appear over valued - regardless of whether it is virtual or real money. This concern demonstrated further through Alex's Monkey Investment Competition where all three portfolios were worryingly successful (or he's just keeps fantastic company with a particular knack for stock picking).
So with my recent live investments where has my real money gone? I admit that I had to seek additional advice from friends who understand significantly more than me. Uneasy with the the traditional opportunities I ended up investing in Emerging Market funds, particular Russia, with the intent of holding long term. These positions were recently augmented by a purchase of Sony shares after the markets battered them with a share price drop of over 13% for missing targets and ending the third quarter with an operating loss of $181m. Again, looking to hold the position for a longer period as the price recovers.
For any budding investors looking to get involved and are wondering how you go about putting money on the stock market, here is a quick run down. To trade, I have an account at Interactive Investor who are currently offering reduced commission rates (to £2 per transaction) on UK trades and have delayed the quarterly fee until the new year (£25). Much of my research is done using publicly available material from places such at the Financial Times, Bloomberg and BusinessWeek. My friend's blog, The Angry Economist also provides an interesting take on what is going on the world so I strongly encourage you to check that out too. But remember, never invest what you can't afford to lose - it's real money with real risks.
Wish me luck. I shall be sure to post updates on the success of the picks and how they've been affected and what I learnt as I explore this exciting new hobby.