About qualitysharesurfer

UK based private investor sunlighting as a competition economist

Meme investing

A few people I know seem to have started to show an interest in investing lately. I’ve been shown several fairly hilarious videos on investing from my wife’s TikTok feed, which seems a bit like the modern day equivalent of hearing stock tips from the shoeshine boy ie probably not a good sign. In the meantime my news feed is filled with talk of ‘rampant speculation’ by retail investors in various bizarre stocks or cryptocurrencies. Interesting times.

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Trading surgery

My investing strategy has two stages. The first is to identify a watchlist of the highest quality businesses I can find. This takes advantage of the ‘big idea’ underpinning my strategy – that I can identify high quality businesses that are likely to be materially undervalued when their long term growth is properly accounted for. The second stage is to trade the businesses on the watchlist based on their current momentum, valuation and news flow.

In practice, it’s been the first stage rather than the second which has delivered most of the returns. This is demonstrated by the strong relative performance of my benchmark buy and hold portfolio, which simply holds all of the shares on my watchlist for the long term. My approach to the second stage is less clearly defined and has evolved over time as I have experimented with different approaches. If I want to improve my results, I think this is what I need to focus on.

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Back to the races

January seems to have got off to a flying start with stock markets resuming their bull run. I’m currently basking in the warm glow from a rash of positive trading updates issued by several of my larger holdings, including Boohoo, Games Workshop, Gamma Communications, Liontrust and most notably Best of the Best (notwithstanding rather perverse reactions from Boohoo and Games Workshop). Nice as this is, it’s hard to ignore the current speculation that we are in a bubble and that impending doom is lurking somewhere round the corner. It does feel that way. After discussing this in my last few posts, I don’t have much new to say about the bubble. I set out my plan of action in my January review.

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Portfolio review: January 2021

Well I’m glad to see the back of 2020, a year in which the world truly went to shit. Given the catastrophic hit to GDP, it’s surprising that 2020 turned out to be a very decent year for investors who managed to keep a level head. My overall return for 2020 came in at 34.1%, exceeding my long term average. All in all I’m happy with this result, but I was a bit lucky to be honest.

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Bubble forming?

The continued strength of the stock market is being embraced by some investors, eagerly anticipating the long-awaited resumption of normality after the Covid era. Many others of a more skeptical disposition are watching in disbelief as they see a bubble of historic proportions continue to grow. This latter view is also being stoked by some apparently egregious examples of excessive speculation in certain technology stocks: the inexorable rise of Tesla and the DoorDash and Airbnb IPOs this week to name a few.

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Regime change

We’ve had a lot of important news over the last couple of weeks. Biden has been declared victorious in the US elections, though Trump is yet to concede defeat. On Monday we also had the groundbreaking news that Pfizer’s Covid vaccine is claimed to be 90% effective. These changes have resulted in a lot of stock market volatility. This hasn’t been great for my portfolio so it seems important to take stock of the situation.

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Portfolio review: October 2020

Three-quarters of the way through the year and the crash we had is already starting to feel like ancient history, given how rapidly the stock market has rebounded since then. On the other hand every day life is sadly still far from back to normal. My portfolio has continued to make good progress over the last three months and I’m pleased with performance of 24% YTD.

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Horizon scanning 2: internet wars

A couple of years ago I wrote a post about horizon scanning: taking a big picture perspective on how the economy as whole is changing and what this implies for future growth opportunities. The main theme was how the internet is transforming the economy – while some sectors of the economy are being disrupted, others are growing rapidly. This transformation is the most significant change happening to the economy by far and there’s still a long way to go. From an investing perspective, I think it’s critical to understand as much as possible about who the winners and losers are going to be. So I’m following up on my previous post with a more detailed look at the dynamics of competition between internet-related businesses…

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Signs of trouble?

The pace of my output has slowed considerably in recent months. This is partly just a case of losing a bit of momentum as work and life events get in the way and partly because the Covid-related disruption has changed my routine. I haven’t had my two hours of commuting each day to spend jotting down my investing thoughts and haven’t yet found the discipline to consistently set aside other time. That said I’ve got quite a few half-baked blog posts on the go and hope to be able to share them soon. Anyway, here’s a brief update on my latest thoughts on what’s happening in the markets and my latest trades…

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