Difficult week

It was a difficult week last week, with falls across a lot of the portfolio. The weekly performance at almost -5% was the worse for more than a year. I’m increasingly feeling that we are embarking on period of volatility where my momentum strategy is going to come a bit unstuck. Though it’s premature to say that of course. September is often not a great month for investing. Continue reading

Using stop losses

I’ve decided to have a more detailed look at my use of stop losses. By using a stop loss I mean selling a share if its price falls to a predefined level. Stop losses fit naturally within a momentum based strategy, as they discipline you to sell shares that lose momentum.

My current use of stop losses is a bit ad hoc and I’ve been wondering whether and how to be more systematic. In particular, I’m concerned that I might be applying them a bit too vigorously. There have been a few occasions recently when I’ve sold a share on price weakness only to buy back again a couple of weeks later when the price has bounced.
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Sketchy week

Some volatility for share prices again this week, particularly on Friday following a further North Korean missile test and some hints from the Bank of England that interest rate rises may be coming sooner rather than later. Higher interest rates would be bad news for my portfolio both because equities become less attractive relative to bonds and because of the impact on the exchange rate. A higher pound means my investments, which mostly earn in dollars, are worth less in pounds. Accordingly, my portfolio has taken a bit of a hit today. Continue reading