Back to 2003

Steady losses until end-August, then one on the chin in September, two to the body in October, and now I'm being kicked in November, Losing nearly 50% of my stock market funds in 2008 means that I'm back to where I was in 2003.

I suppose I could say that I got one prediction correct: that resources and commodities would be badly hit - they have been, but then just about everything has been badly hit.

All this carnage has occurred against the background of much insider buying, but this has seemed to be a misleading indicator throughout this year.

Let junk mail be your guide

After many years when my junk mail regularly included invitations to invest in property and become a property millionaire (strange how property millionaires are so willing take time out to give seminar talks to those who've not yet managed it?), these have now ceased, but been replaced by exhortations to invest in various commodity funds. Apparently retail investors have gone heavily into commodities/resources in the winter months of 2007/8. Well, I've reduced my allocations to these sectors because .....

Buying on the dips

In the context of a dire UK stock market - down 15% thus far - I seem to have escaped relatively lightly at minus 6%. This has been despite quite heavy allocation to financials. It's really difficult to understand why, but I've been helped by large rises in Dragon Oil, Kazakhmys (copper), Albidon (nickel and other metals) and a recovery in my largest holding, Character Toys.

Volatility has been incredible, but until today each bounce has been followed by a larger move down. Many comment that instead of "buying the dips" one should "sell the rallies". Despite the waves of experts' worries, I've been adding on the dips and only slightly trimming on rallies. We'll see if it works: certainly, I've got a higher stream of dividends due but who's going to get excited about a 5-6% annual return?

My reasoning for adding is that I've seen so much directors' buying of own company shares over recent months and in companies where I see compelling value: Cattles, Robert Walters (superb results). There were also heavy directors' purchases in HBOS after the dramatic plunge in its shares amid rumours of a liquidity crisis last Wednesday. Hearing the vehement denials from the bank itself and the poo-pooing of the rumours by the Bank of England, I purchased more HBOS immediately.