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GoSeigen million challenge!

Honest reporting on shorter-term trading activity and ideas
GoSeigen
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Re: GoSeigen million challenge!

#91213

Postby GoSeigen » October 27th, 2017, 4:53 pm

The FTSE100 and many other markets including the S&P 500 have been performing strongly since the last trade in September. Many bank stocks are also moving up, but BARC has struggled. The bank is still looking good value to me and although it does feel a bit early to be buying BARC, I have today added to the position in this portfolio.

If FTSE breaks to decent new highs I will again hedge against this additional bank equity exposure.

Today's trade:

Date          Transaction   Symbol        Unit Cost     Quantity      Fees          Value
27 Oct 2017 BUY BARC 1.84025 800 £19.31 £1,491.51



GS

Kipling
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Re: GoSeigen million challenge!

#103999

Postby Kipling » December 13th, 2017, 8:27 pm

GS,
I've found your posts really informative and I like the whole idea of trying to turn £3000 into £1 million, so I'll say challenge accepted.

My chosen vehicle is a Lifetime ISA managed through Youinvest - I'm going to take advantage of that because at 36 it'd seem churlish not to take advantage of £750 next April.

My first move has been to take 20 units of SEMB at around £85 - the reasoning behind that is the monthly income will offset portfolio admin and buying costs in the near- and medium term.

Again, many thanks for your posts, they've been a part of my night reading on many a dull watch,

K.

GoSeigen
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Re: GoSeigen million challenge!

#120547

Postby GoSeigen » February 26th, 2018, 1:53 pm

Kipling wrote:GS,
I've found your posts really informative and I like the whole idea of trying to turn £3000 into £1 million, so I'll say challenge accepted.

My chosen vehicle is a Lifetime ISA managed through Youinvest - I'm going to take advantage of that because at 36 it'd seem churlish not to take advantage of £750 next April.

My first move has been to take 20 units of SEMB at around £85 - the reasoning behind that is the monthly income will offset portfolio admin and buying costs in the near- and medium term.

Again, many thanks for your posts, they've been a part of my night reading on many a dull watch,

K.


Kipling,

Thank you for your post, sorry for the late reply. I fear my portfolio activity is all too dull: not many wild punts on exciting small-caps! The portfolio value has certainly stalled in the past couple of years, though not for the first time. Turning £3,000 into a million in a lifetime is not that challenging, but doing so in 20 years as originally proposed by poster UKpoker is really tough!

Good luck with your challenge. I don't know how you aim to run the portfolio: it might be nice for readers if you outlined what your approach will be. Also it may be an idea to ask the mods to move your post to your own thread for easier parallel discussion of both portfolios.


GS

GoSeigen
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Re: GoSeigen million challenge!

#120552

Postby GoSeigen » February 26th, 2018, 2:24 pm

The FTSE100 and other markets have wobbled early this year. This brought some bank stocks down, especially Deutsche Bank, which I am buying elsewhere. Lloyds share price has not gone anywhere much for more than four years, reflecting I think excessive optimism at that time versus other banks. Lloyds management are confident of a wall of capital hitting the bank in the next few years. My own view is that there will be minimum 10%pa excess capital over the medium term. I am now ready to buy the shares in this portfolio, hence the following purchase today:



Date          Transaction   Symbol        Unit Cost     Quantity      Fees          Value
26 Feb 2018 BUY LLOY 68.554 3200 £22.92 £2,216.65



There is still a bit of cash in the account, so will be looking for more trades in coming weeks.

[EDIT: Account value stands at £18,338.29 as of 14:25 today]

GS

GoSeigen
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Re: GoSeigen million challenge!

#122936

Postby GoSeigen » March 7th, 2018, 4:05 pm

This portfolio has a holding of RBS bought almost two years ago at 213p. Since then the share has perfomed well, reaching a high of over 300p in January, despite still being majority owned by HMG. I don't like RBS as much as the other UK banks but haven't bought any for a long time. This is probably be premature -- I often buy and sell too early -- but today I have added to the holding.

Description  Symbol  Unit Price  Quantity    Fees      Value    
BUY RBS 2.6097 700 £21.08 £1,847.87


Bank holdings now constitute about 50% of the assets (adjusting for hedges), which I think most would agree is fairly concentrated sectorally, but that is the point: we are aiming for stellar growth to get a quick million, and that will not be achieved by buying a wide range of diversified holdings. My conviction is that banks are going to perform very well, and this portfolio backs that view. There is still plenty of scope to liquidate and add other assets with the remaining 50% non-bank/cash-like allocation.

Just a reminder that this is a real money account (my daughter's savings), so overall the allocation is still rather conservative.


GS

GoSeigen
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Re: GoSeigen million challenge!

#137458

Postby GoSeigen » May 8th, 2018, 8:43 am

Added to the LLOY position today. This is now a farm bet on UK bank equity with roughly 60% exposure divided equally among BARC, RBS and LLOY:



Date          Transaction   Symbol        Unit Cost     Quantity      Fees          Value
08 May 2018 BUY LLOY 66.075 2800 £21.20 £1,871.30





Account value stands at £18,201.59 as of 08:40 today.

GS

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Re: GoSeigen million challenge!

#138100

Postby GrandOiseau » May 10th, 2018, 3:37 pm

GoSeigen wrote:Added to the LLOY position today. This is now a farm bet on UK bank equity with roughly 60% exposure divided equally among BARC, RBS and LLOYGS

Perked my interest - what's the rational behind that?

GoSeigen
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Re: GoSeigen million challenge!

#138139

Postby GoSeigen » May 10th, 2018, 6:23 pm

GrandOiseau wrote:
GoSeigen wrote:Added to the LLOY position today. This is now a farm bet on UK bank equity with roughly 60% exposure divided equally among BARC, RBS and LLOYGS

Perked my interest - what's the rational behind that?


GO,

The purpose of this board was to present real-money portfolio trading strategies to grow £3,000 into £1m in roughly 15 years IIRC. To achieve this one almost by definition needs a concentrated portfolio in conviction stocks. So my trades should be understood in that context: they certainly do NOT imply that anyone should take this approach to their own investment. [See also the OP.]

With that caveat, my choice of bank stocks has been documented above, but basically arises out of:
1. Bullishness about UK stocks in general.
2. The long recovery process undergone by banks and not matched by any rise in their valuation.
3. The wall of capital which I believe will hit banks in coming years making them both profitable and awash with excess capital.
4. Pervasive popular negativity about banks -- both their business and investing in them. Very bullish IMO.
5. Decreasing focus on banks and loosening regulatory capital requirements ahead.
6. Improving interest rate / yield curve environment.
7. Cost cutting and clearing out of non-core businesses under way.
8. Brexit negativity.

I personally find it hard to find to see negatives for the banks. There are various company-specific risks and I think at some point a general market downturn could take their prices down again, but in such a case I'd be a buyer seeing a further bullish point appear!

GS

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Re: GoSeigen million challenge!

#138142

Postby johnhemming » May 10th, 2018, 6:44 pm

GoSeigen wrote:I personally find it hard to find to see negatives for the banks. There are various company-specific risks and I think at some point a general market downturn could take their prices down again, but in such a case I'd be a buyer seeing a further bullish point appear!

I have a lot of bank equity for similar reasons. I think the biggest threat in the short and medium term is Brexit, but I think they are so undervalued that it has essentially been priced in.

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Re: GoSeigen million challenge!

#138206

Postby Spet0789 » May 11th, 2018, 12:15 am

johnhemming wrote:
GoSeigen wrote:I personally find it hard to find to see negatives for the banks. There are various company-specific risks and I think at some point a general market downturn could take their prices down again, but in such a case I'd be a buyer seeing a further bullish point appear!

I have a lot of bank equity for similar reasons. I think the biggest threat in the short and medium term is Brexit, but I think they are so undervalued that it has essentially been priced in.


50% fall in U.K. property prices? Perfectly possible in my opinion, even likely. U.K. banks would survive that but that excess capital would melt like ice cubes in a sauna. No dividends for a decade.

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Re: GoSeigen million challenge!

#138227

Postby johnhemming » May 11th, 2018, 7:26 am

I think the government would have to try throwing out large numbers of recent immigrants for that to happen or the economy go into a real nose dive. The latter could arise from a spike in energy prices.

GoSeigen
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Re: GoSeigen million challenge!

#138247

Postby GoSeigen » May 11th, 2018, 8:56 am

Spet0789 wrote:
johnhemming wrote:
GoSeigen wrote:I personally find it hard to find to see negatives for the banks. There are various company-specific risks and I think at some point a general market downturn could take their prices down again, but in such a case I'd be a buyer seeing a further bullish point appear!

I have a lot of bank equity for similar reasons. I think the biggest threat in the short and medium term is Brexit, but I think they are so undervalued that it has essentially been priced in.


50% fall in U.K. property prices? Perfectly possible in my opinion, even likely. U.K. banks would survive that but that excess capital would melt like ice cubes in a sauna. No dividends for a decade.


I agree it's possible. It would barely affect bank capital though. Mortgage debt is not linked to property values -- the property is merely collateral. Much of that collateral is already at better than 50% LTV anyway. When house price falls arrive, home owners themselves are going to take the hit to their net worth.


GS

OhNoNotimAgain
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Re: GoSeigen million challenge!

#138353

Postby OhNoNotimAgain » May 11th, 2018, 2:36 pm

GoSeigen wrote:
I agree it's possible. It would barely affect bank capital though. Mortgage debt is not linked to property values -- the property is merely collateral. Much of that collateral is already at better than 50% LTV anyway. When house price falls arrive, home owners themselves are going to take the hit to their net worth.


GS


When has there been a property crash where banks did not get hit?

GoSeigen
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Re: GoSeigen million challenge!

#138358

Postby GoSeigen » May 11th, 2018, 2:48 pm

OhNoNotimAgain wrote:When has there been a property crash where banks did not get hit?


I don't know. When?

GS

OhNoNotimAgain
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Re: GoSeigen million challenge!

#138408

Postby OhNoNotimAgain » May 11th, 2018, 5:56 pm

GoSeigen wrote:
OhNoNotimAgain wrote:When has there been a property crash where banks did not get hit?


I don't know. When?

GS


Well done that boy.

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Re: GoSeigen million challenge!

#138410

Postby johnhemming » May 11th, 2018, 6:06 pm

A lot does depend on the extent to which the regulations on mortgages have been relaxed both in terms of affordability and LTV.

GoSeigen
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Re: GoSeigen million challenge!

#138451

Postby GoSeigen » May 11th, 2018, 11:09 pm

OhNoNotimAgain wrote:
GoSeigen wrote:
OhNoNotimAgain wrote:When has there been a property crash where banks did not get hit?


I don't know. When?

GS


Well done that boy.


Great question and great follow-up, thanks for sharing your property crash expertise, Rob. Now can we get back on topic please?


GS

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Re: GoSeigen million challenge!

#139172

Postby spasmodicus » May 15th, 2018, 12:31 pm

When I read GS’s post about getting rich quick from banks I sighed and double sighed. And then sighed again a few more times for good measure. I have held this rubbish since before 2008. LLOY, BARC and RBS, all of them.

However, the discussion set me thinking. To make a million from 3k, you could do it incrementally, i.e.lots of small gains, or do it with multi-baggers back to back.

We’re talking about multiplying our money by 333 times, which requires an awful lot of hard work and luck to achieve incrementally. Another approach would be to get two 18 baggers back to back, or three 7 baggers back to back.

You could go into something completely new, e.g. bitcoin a few years ago and hope for the best, but for every bitcoin there are probably 100 failed ideas which I more probably would have chosen. Or you can go for a company that has fallen from grace and been thoroughly de-bagged, but is still in business (i.e. not a complete zombie. like typical penny shares) and has the potential to regain its former glory. This, I suppose, might be the case for banks

To give an idea of how much the shares might go up, we only have to look at how far they came down, i.e. the “De-Bag Ratio” that is the ratio of pre-fall maximum share price to the minimum after a crash. It seems reasonable that the company might achieve something like its previous maximum. Now look at the “Re-Bag” Ratio, that is the max. share price divided by current (maybe slightly recovered) share price to determine how much recovery potential is left. In the case of the banks, the share price maximum was of course based on froth, but there is absolutely no reason to suppose that it couldn’t happen again

Other sectors spring to mind, e.g. mining and oil which have always had serious bagging potential. The mining sector has mostly already recovered, Anglo American being an example which already 5-bagged in 2016-17 (I missed most of that). Oilies have a bit further to go. My favourites are PMO, GENL and TLW, of which the latter approaches the banks’ ReBag Ratio, with in my view a lot bigger chance of achieving or even surpassing it.


(these figures taken from HL and may conceal restructurings, rights issues etc)

I hold all of the above and some BARC as well. I have also been a customer of Barlays for nigh on 50 years. A glance at their 10 year performance is enough to convince me that, if anyone is enriched, it will be their directors and not their shareholders and that their customers will continue to be ill-served as in the past. I think that this goes for the other big banks too. Maybe some genius inside one of these banks will have the nous to invent some suitably opaque replacement for mortgage backed securities which will temporarily enrich their investors, but I doubt it - especially as they have all been told not to be naughty in future.

I hope that you are right about the banks GS, but boy, it has been a long time coming! I have trousered some decent, if unremarkable returns from miners and oilies recently and I am looking round for the next sector to crater completely, so that I can maybe short it and then benefit from its recovery. At the moment, it’s looking like UK high street businesses are going down the tubes pretty fast.

anyway, good luck everybody,
S

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Re: GoSeigen million challenge!

#139281

Postby Spet0789 » May 16th, 2018, 12:34 am

GoSeigen wrote:
Spet0789 wrote:
johnhemming wrote:I have a lot of bank equity for similar reasons. I think the biggest threat in the short and medium term is Brexit, but I think they are so undervalued that it has essentially been priced in.


50% fall in U.K. property prices? Perfectly possible in my opinion, even likely. U.K. banks would survive that but that excess capital would melt like ice cubes in a sauna. No dividends for a decade.


I agree it's possible. It would barely affect bank capital though. Mortgage debt is not linked to property values -- the property is merely collateral. Much of that collateral is already at better than 50% LTV anyway. When house price falls arrive, home owners themselves are going to take the hit to their net worth.


GS


I’m afraid that’s a naive view.

Firstly, there are enough mortgages with LTV worse than 50% that, accompanied by the higher defaults we would expect to see in that environment, the banks would be foreclosing and booking losses. That would obviously hurt the numerator of their capital ratios.

Secondly and far more importantly, the risk weighted capital consumption of a mortgage book is a (highly convex) function of LTV. 1bn of 50% LTV mortgages consumes almost no capital. If those become 100% LTV following a fall in market value, even those mortgages that continue to be repaid will consume many many times more capital. It is this factor which will blow the doors off.

The PRA will either require a capital raise, or shut off divis for 5 odd years until capital is rebuilt. Either way, the stock is toast.

For this reason, until we see a normalisation of house prices (ie a fall>30%), I wouldn’t touch UK banks. I am more conservative than that.

GoSeigen
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Re: GoSeigen million challenge!

#139288

Postby GoSeigen » May 16th, 2018, 7:41 am

Spet0789 wrote:I’m afraid that’s a naive view.

Firstly, there are enough mortgages with LTV worse than 50% that, accompanied by the higher defaults we would expect to see in that environment, the banks would be foreclosing and booking losses. That would obviously hurt the numerator of their capital ratios.

Secondly and far more importantly, the risk weighted capital consumption of a mortgage book is a (highly convex) function of LTV. 1bn of 50% LTV mortgages consumes almost no capital. If those become 100% LTV following a fall in market value, even those mortgages that continue to be repaid will consume many many times more capital. It is this factor which will blow the doors off.

The PRA will either require a capital raise, or shut off divis for 5 odd years until capital is rebuilt. Either way, the stock is toast.

For this reason, until we see a normalisation of house prices (ie a fall>30%), I wouldn’t touch UK banks. I am more conservative than that.



Been there, done that. It happened in 2008/9: prices normalised, the repossessions** happened, the shareholders lost all their money, the capital was raised. It's not going to happen again in the foreseeable.


Meanwhile such negativity actually supports a bull thesis: conservative investors having no allocation to banks means lower prices for those willing to take the risk now. [Point 4 in the list here: https://www.lemonfool.co.uk/viewtopic.php?p=138139#p138139]


GS
(** foreclosure is not a term used in the UK; similarly you cannot "hand back the keys" here.)


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