LM portfolio as at 10/11/2023:
| Code | Sector | Date Bought | Cost | Value | Gain/Loss |
|---|---|---|---|---|---|
| LM055 LM055-2 |
General Financial | 11/01/2023 02/05/2023 |
£2560 | £3210 | 25.45% |
| LM057 LM057-2 LM057-3 |
Gas, Water & Multiutilities | 12/01/2023 30/05/2023 06/09/2023 |
£3810 | £4740 | 24.44% |
| LM058 LM058-2 |
Support Services | 17/01/2023 20/07/2023 |
£2540 | £2830 | 11.40% |
| LM061 LM061-2 |
Aerospace & Defense | 20/02/2023 13/10/2023 |
£2540 | £2820 | 10.72% |
| LM071 LM071-2 |
Construction & Materials | 24/07/2023 22/09/2023 |
£2550 | £2620 | 2.60% |
| LM074 | Industrial Transportation | 24/07/2023 | £1270 | £1700 | 33.82% |
New idea: look at beaten-down shares, keep an eye on them, buy when they start to move up again, make lots of money.
OK, I'll admit this isn't the first time I've had this idea. I did try something similar back in December 2021 and ended up losing a few hundred pounds in just 12 days on The Hut Group (LM046). I watched it for a couple of weeks and saw that it was inching up in value following a massive fall.
One day it spiked up to around 230p and I pulled the trigger, fearing if I didn't act swiftly I would miss out on a huge run-up in price.
I was too quick to jump in and it quickly turned around and started to fall again. I got out and cursed my impatience. That was the end of the idea and I didn't comtemplate looking at any other possible "recovery" shares.
THG, by the way, dropped further after that and nearly 2 years later it is still languishing at around 60p. The last time it gave any results it told the market it had lost half a billion pounds in the previous year so I don't think it will be rising in price any time soon. A bullet dodged there I think.
And so we come to a couple of weekends ago... I got the Sunday Times and glanced at the Top 200 Companies price table on page 10 of the Business supplement. I was struck at how many shares were at their 52 week lows - around 42 by my reckoning. Surely this is a massive bear sign? 42 companies out of the top 200 closed on the previous Friday at their lowest level in a year.
With the FTSE 250 down at 18,000 - and lower - it's back at early 2015 levels again. There doesn't appear to be much to be optimistic about in the short term.
Darvas talks about this in his superb book, How I Made $2 Million in the Stock Market.
The overall market is in the doldrums and he hasn't had any buy signals for months but then some shares pop their heads up and make themselves known. They are quietly starting to increase in value and he watches carefully to make sure it's a sustained climb before he invests. Spoiler alert - he makes a lot of money.
We're less than two months from Christmas and I already know I will do as I always do over Christmas and re-read Darvas's book. With any luck it will reinforce the patience aspect of trading which I think is very important. Over the next weeks and months I'll watch these 42 shares in a spreadsheet and look for signs of a recovery, adding to them if I spot more examples of 52 week lows in the Sunday Times.
Maybe, or should I say hopefully, some of these run-down companies will turn around and provide a good opportunity for profit.
The chart of the LM portfolio value has been pretty steady for about 18 months now which would suggest I have been very patient. It would be nice to see a bottom left to top right gradient being drawn at some point though - so any valid trading opportunity should be explored.