DIY Investor Magazine
/
2015 Issue
44
The financial world would have you believe that
successfully running your own investments requires the
expertise of Warren Buffett, the cunning of Nick Leeson
and a skyscraper in the City of London full of analysts
gorging upon reams of investment data. This is simply
not true, as we amateurs at Saltydog have proven.
Those with the courage to go it alone will not only
enjoy a better return, they will also acquire a fascinating
and educational hobby; all you need is a computer, a
supply of up-to-date fund performance information,
access to a good fund supermarket platform and, of
course, some training. You should cautious but not
fearful; managing your own money will provide the
motivation to succeed and you will have the instant
gain of not having to pay an IFA`s charges.
Remember, as the government endeavours to balance
the economy and reduce the country`s debt it cannot
give to anybody, anything that it first does not take
from somebody else. As a saver and therefore a person
of means, they will be coming to you, whether you like
it or not. My initial investment target was to produce an
income greater than my wife and two daughters could
spend; I have now adjusted this to include a further
contribution towards the economy.
Your savings and investments are your ‘baby’ - put
simply, will you or an outsider have the most interest
in securing for you a well-financed retirement and
an inheritance for your children? Believe me, today`s
politicians and financiers are not going to come to your
rescue, so now is the time for all good men and women
to come to the aid of their own savings.
The thought process behind Saltydog Investor was not
complicated; we simply wanted to produce a process
and a supply of fund performance numbers that were
straightforward and productive for ordinary people to
use to enhance their savings. Some key considerations
were:
THE ROAD TO BECOMING A D.I.Y. INVESTOR
IS PAVED WITH GOOD INTENTIONS
•
Investing in stock market equities will make you
money in the long term.
•
There is some risk involved, but as an active DIY
investor this should be controllable.
•
IFAs were not the solution since they could not
actively manage all of their clients` portfolios and
even if they were to try to, it would be prohibitively
expensive and therefore pointless.
•
Investments should be in Unit Trust funds and
OEICs, not shares.
•
You get the advantage of scale and are buying a
diversified portfolio of companies.
•
Professional managers and their teams have the
time and expertise to investigate and monitor the
performance of the companies in which they invest.
•
We would monitor the relative performance of the
funds and remove the non performers from our
considerations.
•
Funds are broken down into Investment Association
(IA) sectors, are highly regulated and it is cheap
and easy to switch funds in response to changing
market conditions.
•
Selecting the IA sector in which to invest is the first
decision followed by individual fund selection; when
a sector is performing well it floats all funds in that
sector. Some funds will float higher than others and
these will be the ones we would seek to identify.
•
Momentum trading is the approach to the selection
of sectors in which to invest.
This was the basis upon which we started to formulate
our method of operation and at this time we happened
across the story of legendary American momentum
investor Jesse Livermore, one of the most remarkable
investors in history, making and consequently losing
four fortunes through not adhering to his own maxims.
At the height of the American stock market collapse in
1929 Livermore was worth over $100million, equivalent
to $4billion in today`s terms. In his book ‘Reminiscences
of a Stock Operator’ Edwin Lefevre records Livermore`s
thoughts, sayings, methods of working, and where and
why he made his fortune-losing mistakes.
Richard Webb,
Managing Director
