LM portfolio as at 30/07/2021:
| Code | Sector | Date Bought | Cost | Value | Gain/Loss |
|---|---|---|---|---|---|
| LM026 LM026-2 LM026-3 |
ETF | 14/10/2020 09/12/2020 06/07/2021 |
£3430 | £3830 | 11.65% |
| LM028 | 'No specific industry' | 16/11/2020 | £1010 | £1110 | 10.28% |
| LM032 LM032-2 |
Industrial Transportation | 07/12/2020 20/01/2021 |
£2070 | £2810 | 36.11% |
| LM033 | Health Care Equipment & Services | 04/01/2021 | £1050 | £1260 | 19.58% |
| LM034 | Food & Drug Retailers | 18/01/2021 | £1020 | £1190 | 16.61% |
| LM035 | Food Producers | 19/01/2021 | £1040 | £1110 | 6.57% |
| LM037 LM037-2 |
Life Insurance | 03/03/2021 05/07/2021 |
£2290 | £2560 | 11.87% |
| LM038 | Banks | 10/03/2021 | £1020 | £1070 | 4.96% |
| LM039 | Pharmaceuticals & Biotechnology | 30/03/2021 | £1030 | £1120 | 9.24% |
| LM040 | General Financial | 27/04/2021 | £1020 | £1050 | 2.09% |
| LM041 | Real Estate Investment Trusts | 27/07/2021 | £1270 | £1280 | 1.02% |
| LM042 | Construction & Materials | 27/07/2021 | £1270 | £1240 | (2.65%) |
A winning trade although perhaps the profit was taken too soon...
Sometimes hitting a winning trade can be more difficult than having a losing trade.
Take for example the trade that was recently closed in the LM fund - LM030 - which I detailed last week.
This was a long position in Brent Crude.
Here is the price chart and the three red arrows show each of the entry points:
The blue arrow is the exit point where I sold all the shares, closing the trade. I am aware that some people will not sell all their shares at once. Instead they may sell only a portion of their total holdings and keep the rest.
So they may buy 200 shares and then if they hit 25% profit they sell half of their shares to "bank" some of the gains. I've heard it called "top-slicing" on a podcast I listen to.
Whether it's a good strategy or not I couldn't tell you. It's not something I'll ever do as I just can't see any advantage in this.
Surely if you have reached the point where you think your share has hit a peak or you don't believe it can go any higher, this is the time when you close out of the trade. You cash in your chips, sell all your shares.
If you've decided that you don't think the share will gain any more in price then why keep hold of it?
Although I'm out of this Brent Crude trade and I made a very nice profit, I find myself second-guessing my decision. Did I get out too early?
Look at the graph again. The day after I sold my shares the price recovered. Had I kept the position it would now be very healthy with a running profit of 4 figures.
However, there was no way to know this was going to happen. The price could've continued to fall.
Not knowing which way the market will go is the norm and is the reason why I have rules. It's only over time that I will find out whether my rules make money.
While I might be annoyed that I potentially closed LM030 too early, these same rules got me out of LM014 just before it fell 20% in one day (you can read more in the update from 15/03/2020 here).
I continue to do my weekly checks and it isn't out of the question that I buy back in to Brent Crude.
It just depends on what my rules tell me to do.