was a short position this year
Every year I use the final trading page of the year to review my performance, starting with the positions I closed. I began 2019 with 12 open positions consisting of five longs (Greene King, Shire, Saga, Cineworld and John Laing Group) and seven shorts (Netflix, Twitter, Snap, bitcoin, Just Eat, Weis Markets and Rightmove). Over the course of the year each of them was closed (though I’ve since suggested fresh short positions in Twitter, Netflix and bitcoin and had an ill-fated attempt to revisit my Just Eat short).
The first of the positions to go were Shire and Saga. They were both closed in issue 929. Shire made a profit of £365 while Saga lost £525. In issue 935 I closed Netflix at a loss of £150. Snap I ditched four weeks later at a loss of £109.
I closed bitcoin in issue 943, making a large profit of £1,744, along with Twitter, with which I earned £19. I also sold out of Just Eat at a loss of £228. I took profits of £932 on Greene King in issue 945 and a small profit of £44 on Cineworld (947). Rightmove was closed in issue 951 at a loss of £920. Finally, I closed John Laing Group (959), earning £216 and Weis Markets (973), making £400.
The year’s 21 trades
In addition to my 12 positions carried over from 2018, I also offered 21 trading ideas during the course of this year, eight of which were closed. In issue 931 I tipped recruitment agency Hays, only to have to close it in 959 with losses of £56.
In issue 937 I revisited my Tesla short, but closed the position at a loss of £480 in issue 971. A long bet on screed producer Somero I opened in issue 939 was closed in issue 951, losing £950. I abandoned a long tip on retailer Superdry made in issue 943 in 969, losing £488.
In issue 945 I suggested that you take a short position on image-sharing site Pinterest, which was covered in 959 at a loss of £1,000. Another attempt to short online delivery firm Just Eat in 949 lost £900, while my tip on construction firm Kier in issue 951 had to be covered in less than a fortnight, setting me back £525. My long tip on the retailer Ted Baker in issue 963 ended up being closed in issue 969 at a loss of £880. Finally, my long position in JD Sports in 929 ended up being closed this issue, for a profit of £1,400. Overall, eight out of the 21 positions I closed made money. The 13 that didn’t helped produce a net loss of £2,091 on the closed positions.
The best performers
The good news is that while my closed positions lost money, the tips that are still open have done much better. At present there are 12 tips – seven long positions and five shorts, all made this year. Seven of eight longs and four of five shorts are in the black. Storage space company Safestore was recommended in issue 933 and has produced £840.
Builder Bellway (935) is making £2,508. Bausch Health Companies (959), the company formed from the remains of Valeant, is making £781.50. International Consolidated Airlines Group (967), is making £680. Builder Taylor Wimpey, recommended in issue 973, is making £100. The only tip in the red is packaging firm DS Smith, tipped in issue 975, which is losing £140.
I suggested shorting the digital currency bitcoin (955), a trade currently making a profit of £642. I sold Netflix short again in 957, making a small profit of £24. My Uber short, which I made in 961, is £744 in the black.
Furniture retailer Wayfair (969) is making £577 in profit. The only losing short position is Twitter, which I returned to a few weeks ago in issue 971. It is making a small loss of £40.
Overall, my long positions are making a net profit of £5,259, while my shorts are jointly worth £1,946. This works out at a combined profit of £7,205, so I am making a total profit of £2,381 on all the tips that I have made since this page’s inception three years ago.
I don’t advocate closing any of the open positions. But I’d suggest raising the stop-loss for these stocks to new levels: for Safestore, 700p; Bellway, 3,225p; Bausch Health Companies, $25; Volkswagen, €130; ICAG, 420p; Taylor Wimpey, 130p and DS Smith to 300p.
Trading techniques: weather and stocks
Bookmakers around the country may have slashed the odds on a white Christmas this year, but experts are unsure whether snow, rain or sunshine has any impact on stockmarket prices. Sunshine has long been associated with boosting the economy through higher consumer and leisure spending, although it can also reduce demand for services such as energy. Given the well-documented link between levels of depression and the lack of vitamin D produced by sunlight, it would seem logical that sunshine could make investors more optimistic about the future.
One piece of evidence in favour of sunshine having a positive impact stems from a 2003 study by David Hirshleifer and Tyler Shumway for the University of Michigan Business School. Hirshleifer and Shumway examined daily stockmarket prices for 26 countries between 1982 and 1997 and compared them with weather records for that day. They found that the most important weather factor was sunshine, with the stockmarket doing better on perfectly sunny days than on perfectly cloudy days. Cloudiness was associated with negative returns for stockmarkets in 22 out of the 26 countries.
But Hirshleifer and Shumway’s work comes with several caveats. Firstly, with the exceptions of New York, Helsinki, Paris and Vienna, the effect was not statistically significant, so the correlation could have occurred by chance.
Following this strategy not only requires keeping track of the weather, but also frequent buying and selling, which would drastically increase trading costs and lower returns. Finally, even if sunshine does have an impact on returns, there is no evidence of a link between equities and rain or snow.