UK Investment SIPP blog for the longer term

Suddenly, there’s weakness on the FTSE front with warnings of ‘W’ shaped recoveries and the expectation of a bumpy ride throughout the coming months.

Elsewhere, BA are spreading fear in their attempt to feed from the tax payer begging bowl. 

I couldn’t care if BA survive or not. They are a private enterprise and shouldn’t get government funding. They have always had the worst attitude, with their cabin staff being old and jaded. Try Singapore Airlines, or Cathay. You’ll see the difference.

But all is not gloom.

Interestingly, the Council of Mortgage Lenders advise that less mortgages are in arrears. This will surely help to limit losses in Lloyds’ mortgage portfolio a.k.a. the HBOS self certification mortgage portfolio. There was also talk of Lloyds selling assets of over 100 billion, possibly the very same mortgages. If these things happen, and the HBOS mortgage portfolio is improving not deteriorating, the future will be a whole lot brighter for the black horse.

Personally, I have set my mortgage capital repayments to the highest I have ever repayed, and I am sure many others are doing the same in these tough times. If others are like minded, the deposit side of the balance sheet should be recovering.

Downside risks are defaults on credit cards and unsecured personal loans.

So, I’m going to load up on Lloyds again in the weakness. Bought some more at 67.

Surely Jim Cramer will have to resign or face the sack after being exposed in his own moronic video as an alleged market manipulator, a serious securities crime. His next week will be bumpy. Fellow presenters will shy away from him incase they are associated with his tricks and pulled into his credibility black hole. I feel that the US public may demand a public hanging.

However, surely the whole CNBC network is to blame. CNBC Executives should be first in the villification cue, but they will push Cramer’s neck out there first.

I’ve made a couple of new purchases for my SIPP that I thought I’d mention. I’ve bought RBS and Lloyds quite aggressively. My reasoning is that the government has insured their toxic assets. Also, Lloyds may find that it quickly starts to get cashflow from Joe Public as they are such a big mortgage player and that the public are repaying their mortgages as fast as they can. Therefore, I don’t see Lloyds going out of business.

RBS on the other hand is a more risky prospect as so much of past revenues were made from investment banking. However, as long as they are not nationalised, there could be great upside. I got in RBS around 20p and Lloyds around 50p. I put the biggest proportion into Lloyds.

P.S. my SIPP is now around £11,000 - I’m now nearly immune to the losses.

Terrible, terrible. Thats all I can say. Please don’t mock though.

 Small Cap stocks really took a hammering.

Just a quick update.  

There’s some notable wrong calls I have made and my Merrill’s call to buy, below, now seems embarrasing. I’m glad I’ve got it written down, cause I might have forgotten about it. I hope I learn from it. MEL is now at $44.

As you can see, I’m no Warren Buffet and my target of 50% year on year is no where close. I am now sitting around £24,900 - so well down from the highs. Well my current year on year since I started in August two years will be 16% year on year if it remains the same in August.

I am now predominantly invested in Mining and Oil incl Tullow (TLW), Cairn (CNE), Medusa MML, BG Group, Jubille Platinum (JLP).

Been very busy with work, but will update soon. 

I have made many mistakes in investing and I want to record my mistakes so that I will have to ensure I do not repeat mistakes twice.

Therefore, though shall not,

• Invest in a stock on the basis of stock price movement (MXP: I did this with this oil company - Max Petroleum - and although it is probably quite good, I should have noticed so many sellers from the RNS’s. The company was suspended soon after. Also, PDX, its one of those stock with great prospects but no revenue - cannot beleive I invested in that - I exited soon after, but lost money.)
• Ensure I have produced an analysis and financial estimate on the stock. I recently invested in quite a few without doing this as I got carried away. I must always do this as it points out growth prospects and communicates if something is already a fair price. Cause I want unfair prices on the low side!)
• Do not buy when stocks are expensive - I bought some of the miners eg BHP and Vedanta, but they were pretty expensive and everybody likes them - I exited with a small loss soon after.

I will be keeping this list up to date and I will commit to refering and following it everytime I buy a stock!

This post is the most important post on my blog ever, ever, ever. I am going to BUY Merrill Lynch! Send me to the Sanitorium! 

Why Bank on the Banks you may ask? You may inform me that I am mad as Merrill Lynch have announced 7.9 Billion of writedowns today! I ask you to ignore this. Warren’s number one rule is don’t lose money and I think there is a good margin of safety in this stock.

Including the write offs, Merrill will earn est 3.87 if Q4 is ok. That makes Merrill on a PE of 16.98 - not a bargain you may think. However, the write offs look to be a one off event and its Mark to Marking assets, so they haven’t actually made a loss unless they are realised by selling them. So if the price goes up they make money and will probably also collect coupon payments on them as well, so extra revenue will come in.

In all, I think this is a one off hit to profits and ML could earn 9 dollars the year after - a PE of 7.3. That’s why I’m also buying selected worldwide banks who have had a price reduction, caused but not affected by subprime CDO’s. I also think today is a great time to buy as Merrill may trade down on the news this morning. Merrill is around $65. (update— $62 today) Buffet has recently bought Bank of America. I did too - at a lower price than Buffet. I have also bought Citibank.

Warren - if you read this - can you put in a good word for a job please. I have always day dreamed that I might, one day, be in the position to say to you - Sir -do you want to supersize that happy meal.

PS. After I wrote this article, Merrill dropped today and I got a bit more at around $62.