The bull market has been running for 5 years now, so surely we are due a bear market phase shortly. Not so according to Ken Fisher in his weekend article entitled "Back to the future as we rerun the nineties"
http://search.ft.com/search?queryText=back+to+the+future+as+we+rerun
You will need to be a subscriber or buy the paper for the full text.
It's an excellent article that draws a startling number of parallels between now and 1995 when the bull market ran for a further five years. He writes :-
"Then, as now, a five-year-old bull was still in its early stages. Small stocks had beaten large ones and US stocks had beaten the world. After stocks rose sharply in 1995, fear of heights was catching, just as it is today after 2013's big gains. Folks fretted that the bull was losing steam and couldn't fathom it lasting years more. It did.".
He talks about investors memories of the IPO frenzy, but points out that in the mid 90s mature firms such as Alcatel-Lucent, and Andarko floated and it was only at the end of the decade that companies such as Netscape - exciting technology that later became obsolete came to the stock market. He goes on "Those (later) memories drive jitters over Facebook today, but recent IPOs are mature, quality offerings such as Hilton and Container Store. This is a sign of rising optimism - just like the mid-1990s. No euphoria then, none now."
Whilst I consider myself a stock picker and long term investor with little interest in macro conditions, I believe that he may be right and this bull has a few more years to run yet.
I don't think investors have truly grasped the enormity of the financial crisis and deep recession or indeed the subsequent opportunity it presented to investors to pick up great stocks in a sort of "sale of the century". I said at the time and still believe that 2009 was a once in a lifetime opportunity to build a great portfolio at ludicrously low prices. The events that took place were unprecedented in recent living memory and global recovery is still in its infancy.
Whilst many p/e ratios may looked stretched, they may look less so when economic recovery moves rapidly through the gears. Other factors to consider are whilst interest rates remain at historic lows with no immediate threat of increasing, where else can you get a decent return on your money? Finally it is interesting to note that many Directors are snapping up shares in their own companies like they're going out of fashion despite (in some cases) their shares have risen considerably in the past 5 years. From a contrarian point of view, many traders and investment managers have already increased their cash piles. Bear markets are rarely anticipated.
I currently see no reason to sell any of my holdings, and touch-wood I have been very pleased with their progress where recent RNS releases have been very encouraging. As ever, I constantly keep my eye out for any bargains that may arise through irrational selling, or any other reasons. Mr Market always provides opportunities.
Moving on to one of my current portfolio favourites - TRAKM8 - this weeks Sunday Telegraph has made me think that as optimistic as I am about this company's future, its recent trading statement and tie up with Direct Line Insurance (sole supplier), perhaps even I've underestimated just what a potentially exciting area and company this could turn out to be. On the front page of today's Sunday Telegraph and in their money section we have:-
"Drivers to have a spy in the car"
http://www.telegraph.co.uk/finance/personalfinance/insurance/motorinsurance/10837263/Drivers-without-insurance-black-box-could-be-forced-off-the-road-within-10-years.html
Some of the key paragraphs include:-
"Drivers will within 10 years face inflated insurance premiums – or even be forced off the road – unless they allow their driving to be monitored at all times by tracking technology."
"Tom Ellis of Gocompare, the insurance comparison website, who spoke at the British Insurance Brokers' Association (Biba) seminar, told The Telegraph: "In 10 years' time there will still be customers who prefer not to have a telematics device installed, [but] it will be an opt-out situation, rather than an opt-in. "
"The technology will soon be fitted in new cars as standard. Under EU regulations, all new cars will need black box-style technology, known as eCall, from October 2015, to help emergency services find crashed vehicles. "
"Direct Line this year launched a self-install device available to all drivers, which it said could save young drivers up to 25pc. The firm said drivers with the best driving records could get a 40pc discount on renewal. "
It's worth reading the full article but it also includes this:-
"Penny Searles, managing director of the firm, said: "We are seeing a tipping point this year, where more insurers are making this technology available to the mass market. "
From Trakm8's recent trading statement they also talk about this year being a tipping point for their Telematics solutions. The market is potentially massive, and the sole supplier agreement that Trakm8 has with Direct Line is a hugely significant milestone.
Without trying to get too overexcited, Trakm8 are operating profitably with excellent cashflow, a high percentage of recurring revenues and gross margins (last reported) above 70% in a potentially explosive growth area. The market cap. is still just under £25m. If the company continues to develop in the way it has so far then it could potentially be worth many hundreds of millions in the not too distant future.
Here's hoping anyway.
Sunday, 18 May 2014
Monday, 5 May 2014
Trakm8 telematics - A Direct Line to success?
This is just a short blog after some reading and a little bit more thinking about the future of Trakm8 and telematics. Firstly, after wading through several hundred posts on the Advfn Quindell thread, I did actually read one that was useful which was simply the link below:-
http://www.telematics.com/telematics-blog/telematics-stay/
Whilst there is no mention of Trakm8 (Trakm8's clients now include Direct Line, Eon, St Gobain, the AA and Fujitsu), it does imply that telematics is at a key juncture which tallies with John Watkins' (Executive Chairman of Trakm8) outlook statement at the half-year where he states that a tipping point in mass market adoption of telematics appears to have been reached.
Bearing in mind Trakm8's Friday announcement of it's contract win with Direct Line as sole telematics supplier of self install devices, I then read Direct Line's recent trading statement which has this to say about its roll-out:-
"On 23 April 2014 the Group launched its self-install telematics proposition in the UK after a successful pilot. The Group believes this positions it as one of the leaders in developing the telematics market and enables it to offer telematics to a broader range of customers. Take-up remains strong in Direct Line new policies with one in five under 25 year olds electing for telematics."
No wonder John Watkins describes the partnership as a key milestone for Trakm8.
Even after Friday's share price rise, at 72p Trakm8 is still a minnow with a valuation of just less than £21m. With a short, medium and long term view I'm getting increasingly excited about Trakm8's prospects. Interestingly employees and others seem to share my enthusiasm and have been acquiring shares out of treasury with the last purchases at a price of 69.5p.
N.B. I don't have any interest in Quindell apart from its involvement in Telematics.
http://www.telematics.com/telematics-blog/telematics-stay/
Whilst there is no mention of Trakm8 (Trakm8's clients now include Direct Line, Eon, St Gobain, the AA and Fujitsu), it does imply that telematics is at a key juncture which tallies with John Watkins' (Executive Chairman of Trakm8) outlook statement at the half-year where he states that a tipping point in mass market adoption of telematics appears to have been reached.
Bearing in mind Trakm8's Friday announcement of it's contract win with Direct Line as sole telematics supplier of self install devices, I then read Direct Line's recent trading statement which has this to say about its roll-out:-
"On 23 April 2014 the Group launched its self-install telematics proposition in the UK after a successful pilot. The Group believes this positions it as one of the leaders in developing the telematics market and enables it to offer telematics to a broader range of customers. Take-up remains strong in Direct Line new policies with one in five under 25 year olds electing for telematics."
No wonder John Watkins describes the partnership as a key milestone for Trakm8.
Even after Friday's share price rise, at 72p Trakm8 is still a minnow with a valuation of just less than £21m. With a short, medium and long term view I'm getting increasingly excited about Trakm8's prospects. Interestingly employees and others seem to share my enthusiasm and have been acquiring shares out of treasury with the last purchases at a price of 69.5p.
N.B. I don't have any interest in Quindell apart from its involvement in Telematics.
Sunday, 4 May 2014
Ignore market conditions and take the long term view
Friday brought further good news for my holding in Trakm8 with the announcement it had been appointed the sole telematics supplier of self-install devices to Direct Line Group for the recently launched Direct Line DrivePlus Plug-in device. It was confirmation of the significant hardware order Trakm8 announced on 13 January 2014.
John Watkins, Executive Chairman of Trakm8 commented:
"This is a key milestone for Trakm8, as Direct Line Group launches a step-change in telematics for UK consumers. This proposition accelerates the awareness of telematics as an effective tool to improve driving skills and reduce fuel costs. We look forward to building on this relationship further as consumers adopt the Plug-in device."
Trakm8 continues to make excellent progress, and boasts a high percentage of recurring revenues which provide the financial stability from which the company can accelerate its growth.
The recent April trading statement was also very encouraging. The share price rose by 9% on Friday and the current market cap. is around £21m:-
http://michae1mouse.blogspot.co.uk/2014/04/trading-statement-trakm8.html
Avanti Communications also released news of a contract win on Friday with Avonline Broadband. This is a multi-million dollar contract extension, and follows on from a very encouraging rate of contract wins that the company has announced in recent months.
Whilst this is a speculative holding for me, the recent spate of newsflow fills me with cautious optimism, and I continue to hold the shares.
On a separate note, those of you who regularly read my blog will recognise that I am a long term holder of shares, and have very little interest in the general direction of the main indices, I am only ever interested in individual companies and whether or not they look cheap and are worthy of consideration. Buffet's recent letter to Berkshire's shareholder's is well worth reading if you haven't already:-
http://michae1mouse.blogspot.co.uk/2014/03/buffets-letter-to-shareholders.html
Particularly this line:-
"Forming macro opinions or listening to the macro or market predictions of others is a waste of time".
Consider this: in around 2002, all seemed lost in a group called Ashtead, and I distinctly remember watching the share price fall to 1.5p, and considered having a punt. However, I didn't, but did buy some later at 15p when the shares had already 10 bagged from this low point. I later sold the shares for a modest profit. Shares in Ashtead currently stand at £8.73. A £1000 investment at 1.5p would currently be worth £582,000, and at 15p £58,200. Not a bad return over 12 years I'd suggest. Financial crisis!! Who cares if you're a reasonable stock picker with a long term view?
John Watkins, Executive Chairman of Trakm8 commented:
"This is a key milestone for Trakm8, as Direct Line Group launches a step-change in telematics for UK consumers. This proposition accelerates the awareness of telematics as an effective tool to improve driving skills and reduce fuel costs. We look forward to building on this relationship further as consumers adopt the Plug-in device."
Trakm8 continues to make excellent progress, and boasts a high percentage of recurring revenues which provide the financial stability from which the company can accelerate its growth.
The recent April trading statement was also very encouraging. The share price rose by 9% on Friday and the current market cap. is around £21m:-
http://michae1mouse.blogspot.co.uk/2014/04/trading-statement-trakm8.html
Avanti Communications also released news of a contract win on Friday with Avonline Broadband. This is a multi-million dollar contract extension, and follows on from a very encouraging rate of contract wins that the company has announced in recent months.
Whilst this is a speculative holding for me, the recent spate of newsflow fills me with cautious optimism, and I continue to hold the shares.
On a separate note, those of you who regularly read my blog will recognise that I am a long term holder of shares, and have very little interest in the general direction of the main indices, I am only ever interested in individual companies and whether or not they look cheap and are worthy of consideration. Buffet's recent letter to Berkshire's shareholder's is well worth reading if you haven't already:-
http://michae1mouse.blogspot.co.uk/2014/03/buffets-letter-to-shareholders.html
Particularly this line:-
"Forming macro opinions or listening to the macro or market predictions of others is a waste of time".
Consider this: in around 2002, all seemed lost in a group called Ashtead, and I distinctly remember watching the share price fall to 1.5p, and considered having a punt. However, I didn't, but did buy some later at 15p when the shares had already 10 bagged from this low point. I later sold the shares for a modest profit. Shares in Ashtead currently stand at £8.73. A £1000 investment at 1.5p would currently be worth £582,000, and at 15p £58,200. Not a bad return over 12 years I'd suggest. Financial crisis!! Who cares if you're a reasonable stock picker with a long term view?
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