Thinking like a trader

Are you a trader or an investor?

Trick question – the ‘correct’ answer is both (or neither). But underneath this flippancy lies an important distinction – ‘investing’ and ‘trading’ are not mutually exclusive but are different ways of thinking about buying and selling shares.

I’ve always thought of myself as an investor, but recently I’ve started to wonder whether if I want to make real money it would help to think a bit more ruthlessly about winning the game, like a trader. Continue reading

Better to concentrate

Many of the investors I follow advocate concentration and run extremely concentrated portfolios. For example, Warren Buffett says that he operated mostly with five positions. From the other end of the spectrum, momentum trader Mark Minervini, who I have become interested in recently due to his quite stunning results and apparently quite straightforward and intuitive strategy, advocates a similarly concentrated portfolio.

I am happy with the performance of my strategy so far but I have begun to question whether perhaps I can do better through concentrating my portfolio on fewer investments. Continue reading

SOM trimmed; RWS bought

I have trimmed my holding in Somero as it had become too large a percentage of my portfolio. I’ve reinvested some of the proceeds into RWS taking the total number of holdings up to 25. I’ve decided that 25 holdings is going to be the ceiling for now and am planning to have a more careful think about how concentrated my portfolio should be. Continue reading

Watchlist review

I first introduced my watchlist here. Since then I have made some updates including recording my watchlist with scores in a spreadsheet.

This review looks at what has changed substantively to the watchlist since I first introduced it: what has been added, what has been removed and what has been considered but rejected. There’s been quite a bit of change to the watchlist since last time – I expect there to be a lot less churn next time. Continue reading