Nuclear summer

The prospect of nuclear war between the US and North Korea put a bit of a dampener on things this week. I made a few trades on Friday, rotating out of some weaker positions and into some stronger ones.

The North Korea situation seemed to visibly escalate in the news this week as Trump and North Korea issued a series of escalating threats. This does seem to be putting them on a swifter collision course, but some sort of collision has always appeared inevitable. I would have thought the key strategic imperative is to get China to get off the fence and really hurt North Korea economically. Perhaps the only way to do this is to make US military intervention seem more likely?Anyway the situation looks unlikely to resolve itself before escalating further, which could mean some more volatility for stocks.

Speaking of which, we are heading into August and September, traditionally bad months for stocks. With an arguably over valued US market, interest rate rises on the horizon, geopolitical tensions and ongoing Brexit negotiations there seems plenty of scope for them to be bad months this year. However, as ever I’m going to take advantage of my relatively small portfolio and be guided by individual share price movements rather than try to predict them.

On Friday, I sold out of Boohoo again for a 3% loss as the share price became more volatile testing my resolve. I am quite ambivalent about Boohoo at the moment as the valuation is pretty demanding and I fear there is scope for the price to sell off quite hard.

I also sold NMC Health for a 7% loss as it seemed to lose momentum. This is my second trade in NMC that has failed to make money but I still like the business and may revisit when it issues results later this month.

Finally, I rebought my holding in AB Dynamics. I’ve written about it previously here. I previously sold ABDP on worse than expected results and learning about its rather generous share options scheme. I’ve decided to buy back after news of its biggest ever contract win in China and on the share price breaking out to new highs. Having looked into it a bit more the share options looks likely to be less of a drag on medium term profits than I previously feared and the valuation also looks attractive.

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