The last post - well not quite probably!

Copied and pasted from the Advfn BB.

PJ 1 - Thanks.

"If you're not prepared to hold a stock for ten years then don't even think about owning it for ten minutes"

Can't remember the name of the guy credited with this quote? Although I think he then bought Tesco shares and regretted having said it. :)

On a more serious note.

Some sensible comments on here already by the posters that I bother to read (that's everybody except clocktower ;). Can't add much really. Obviously disappointed that results are a little below last year (although not significantly) since we all want to see growth, but in essence, nothing has changed for me. Profitable, cash generative, debt free, Directors interests aligned with shareholders, dividend payer (already received nice yield) etc. It ticks most of my boxes.

I'll sit it out as always, and possibly buy dips. The company is only valued at about £2.5m, and half of that is cash on the balance sheet.

Avesco was in a similar situation in 2009, I just kept buying the shares when they were in the 20p-25p range when it felt like it was just me against the "white-walkers" :). Now they're in the 200p range.

I still like the risk/reward balance at AEO.

Just in case you've missed my blog/post comment elsewhere, I will rarely be posting from now on. I am fortunate enough to have been quite successful over the years, and I sometimes build up shareholdings in companies over significant time periods. I have no intention of alerting the world and his wife to these opportunities any longer. Also, I am a long termer and generally most bloggers and BB posters are traders so we operate in different worlds with different time scales.

I've commented on AEO before, so in this instance it's no skin off my nose to perhaps make this one of my last posts.

Regards PJ 1 and others.

An excellent example of the sort of company to avoid!

My post from the Reach4entertainmnet Advfn thread:-

"BrianGeee - With respect, I not interested in reading research by allenbycapital. Surely R4E are a client of allenbycapital and the research is hardly going to be negative is it?

All I need to know is that in the interims the company was loss making, gross margins are poor, cash flow is poor and they have literally nothing in the way of tangible assets. They've had to make a massively dilutive placing to pay off some debt at 1p per share.

I will watch out for the final results with interest, but unless margins, and cashflow improve drastically then this is a company I'd avoid at all costs.

A company like this is too susceptible to economic shocks. It's worthless really unless it can throw off mountains of cash, and grows strongly. It's not doing that, and I doubt that it will in the near future.

What exactly are investors buying here? It doesn't pay dividends, it isn't growing strongly, and it has virtually zero tangible assets.

I'll leave you will this quote:-
"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
Warren Buffett
Good luck though."

Just one extra thing to add. Personally, I've nearly always found that applying simple metrics is all you need to make good (potentially multibagging) investments.

If you search hard enough, you'll find great little companies that are growing, cash generative, profitable with excellent balance sheets and reasonable p/e ratios. In other words the antithesis of R4E.

Don't throw the baby out with the bathwater

A post reproduced from the Advfn Trakm8 thread:-

r1singson - "But I'm just wondering why you being in such an enviable position (x10 even after this week) would still be a holder having made such bumper profits. Is it that you are reluctant to sell having been probably closer to x20 up? Or that you are very confident there is more to come rather than search for the next multibagger? As I say a very enviable/fortunate position, just a question."

Thanks for reading the blog. Just to emphasise though that it's just my ramblings and not a tip sheet.

As regards Trakm8 (I'm still up far more than 10 times BTW even at today's low point), yes I am convinced that there is far more to come.

I don't share my buys and sells on my blog as frequently as I have in the past, chiefly because the pot has grown to such a level that I can take considerably more time to acquire a position in a potential multi-bagger. If you consider recent market turmoil then I'm sure that you can sympathise with my stance. Trakm8 is an excellent example of investors throwing the baby out with the bath water. Irrational selling by the herd creates opportunities for the patient. If you do what everybody else does then you'll get what everybody else gets i.e. moderate returns or worse still, losses.

FYI - I have and am currently building a position in a micro-cap and it will become my largest conviction buy ever.

To answer your original question in a roundabout way, I have found an investing style that works for me. Imo many investors are far too short term in their thinking. In my early investing days I took profits far too early e.g. AHT (see blog), CKN, etc. At the time, I was as pleased as punch with double digit profits, but in time many went on to multi-bag. AHT would have been a 75 bagger.

My general rule is that unless the story changes then do nothing. Sometimes a share price may get ahead of itself, but sit tight and except that nothing goes up in a straight line. Ignore all noise, especially clowns on bulletin boards and third-rate tipsters.

In my experience at least one or two of my micro-caps will go on and more than 10 bag. Often more. If I pick ten shares and one ten bags and nine go bust then I break even. Of course it might 15 bag, 20 bag, 100 bag etc. I consider the first instance (break even) my worst case scenario. I started investing seriously around 15 years ago. In all that time only one company has ever gone bust on me, and in retrospect that was a highly speculative punt. I've been lucky enough to pick several multi-baggers.

I hope that goes some way to answering your question. All the best with your investing.

R4E a great short in current market conditions?

I've just posted this on the Trakm8 thread. For the benefit of non-Advfn BB users, I've reproduced it here:-

Hydrus post 983 - "Michael I'm sure you can shake it off having bought so low."

Yes, as you know I was buying these in 2011 when they were in the low teens. All well documented on my blog, and on this thread. Let's just say I'm used to the gyrations in Trakm8's stock price, the illiquidity and wide-spread.

As an aside, I love these markets, although please note that I don't use gearing in any shape or form. It's an opportunity to pick up shares in your favourite companies at knock-down prices. If you don't have any spare cash to invest then just sit it out (provided that you have long term confidence in your holdings).

Investor's are an incredibly irrational bunch. For example even Domino's Pizza shares fell by 4.4% today. Even if nuclear war broke out the Brits would still be ordering Domino's Pizzas. I don't hold by the way, maybe I should?

For a bit of light reading you may be interested to take a look at this blog:-

hTTp://michae1mouse.blogspot.co.uk/2015/12/when-is-loss-loss.html

All factual, although Ashtead shares have fallen to a mere £9.32 since writing.

Anyway enough of my off topic musings. For the record Trakm8 is a great little company with great prospects and an undemanding rating for the growth it's achieving, but don't take my word for it or anybody else's. Do your own research and if you can't (DYOR that is)then perhaps take time to consider if stock picking is your bag.

By the way (off topic again) if savvy investors fancy shorting a company then may I suggest researching R4E. Shareprophets were buyers at 4.5p (share price currently 1.4p) and have again bought at around the current share price.

Please DYOR, but, if you'll pardon my French, R4E is an absolute sack of sh*te. They've been recently forced to conduct a massively dilutive placing, capital reorganisation etc to try and clear some debt. Even after this the company still has large debts and a small market cap. R4E's assets are negligible. The company was once again loss making at the interims. Effectively R4E is worthless. It's business is reliant on theatre land in London and New York. If there is a recession then this is a business that will suffer more than most. Imagine a recession and a terror attack. A weak and vulnerable business that may not survive. I hold no position in R4E. ;)

Bull or Bear market? Heads or Tails?

A good article appeared in this Sunday's Telegraph regarding the current market uncertainty:-

http://www.telegraph.co.uk/finance/comment/12103422/Help-for-investors-unfamiliar-with-Zen-like-calmness.html

I particularly love the quotes from the two legendary investors Peter Lynch and Warren Buffett:-

"Peter Lynch, the former Fidelity investment legend, put it well: “Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.”

Warren Buffett was just as forthright: “Unless you can watch your stockholding decline by 50pc without becoming panic-stricken, you should not be in the stock market.” "

I wholeheartedly agree with them, let's face it you'd be daft not too.

I don't normally comment on the gyrations of the main indices or macro conditions and prefer to concentrate my time on stock picking, particularly amongst the micro-caps. In my view, the current market uncertainty is a great opportunity to pick up shares where indiscriminate selling in thin markets is providing opportunities to pick up some bargains.

If I'm honest, despite the obvious wobbles in Asia (particularly China) I'm a little perplexed as to why there appears to be so much doom and gloom. Yes, I'm aware of plummeting oil and resource prices and the implications for oil and resource companies in general, but my simplistic view is that low oil prices coupled with historically low interest rates are generally good for most companies.

Clearly market sentiment isn't helped when Analysts start telling investors to sell everything. Possibly the worst advice I've ever heard. Is it just me, or do you begin to question someone's agenda when they come out with statements like that? It's worth remembering that these so-called financial experts get paid handsomely whether they are correct or not. Frightening really, and an excellent reason to manage your own investments.

Interestingly, it often makes me laugh when I hear traders say, "I'm taking money off the table and I'll start investing again when we reach the bottom of the market". How will they know when that happens? Is this a bear market or just a correction? If you thought a stock was good value a week ago and the news hasn't changed then why would you suddenly think it wasn't good value?

The reality is this. I'd guess some investors sell perfectly good stocks and then sit on their hands waiting for clear signs of a change in market direction that never arrives. Certainly in my investing lifetime, I've never recognised the onset of a bull or bear market phase until it's well advanced, and I've never seen anybody consistently get it right either, and that's with a 50-50 chance of being right or wrong. Most will probably revisit and buy back their shares when the price has already risen above the price they originally sold them for.

This is where I refer back to the Lynch and Buffet comments quoted earlier.

For what it's worth, I'd say the bull market has at least two more years to run before we suffer a significant setback. At least I've got a 50% chance of being right. With a ten year horizon however, I'm very confident that I'm right.