My SIPP is sinking - and my first attempted strangle option trade on Bear Sterns.
After last years 77% gain (to Aug 2007) in my SIPP, last month it fell from £32,000 to around £29,200, so getting my target return of 50% this year will be a challenge. Warren Buffet says he would guarantee 50% year on year for a portfolio under $10 million, so my work is definitely cut out.
It’s funny how confident I was getting inside about my performance, and I was brought back to earth with a big bump. Buffet says there are often many preening ducks in the pond all proud that they are higher up after heavy rain -but it takes a drought to find out who the winners really are and what ducks are fried - see Bear Sterns below.
Also, another famous Buffet quote is - you only find out whose swimming naked when the tide goes out - mainly refering to derivatives.
That brings me to think what sub prime banking casualties we will have - US banks are reporting next week - in preparation for this I tried to do a strangle option on Bear Sterns by buying a call - BSC Sep 115 Call - and a put - BSC Sep 100 Put total permium $4.8- (in my mad money account and not in my SIPP account may I add) - a sort of volatility trade so I’d be in the money if it moved alot by the exercise date of 22nd Sep - but my account was not authorised! Even so, I will monitor this fictional trade and see if it would have made money on the 22nd. I reckon BSC shares will either soar or crash. Interesting that Joe Lewis, the currency speculator billionaire bought 7% of the company. I wonder if he’s hedged it a bit as well.
Also, I just sat the Securities exam on Securites and Financial Derivatives and I discovered I am a marginal failure - 3 1/2 hours to find that out! Here’s a link if any of you are interested! Anyone can sit it. back to the resit - another £180.
http://www.sii.org.uk/web5/infopool.nsf/HTML/qU4sfd?OpenDocument
Back to my SIPP. I have derisked my portfolio and now have around 10 stocks, mostly small companies. To see my recent additions and positions, just click on the image below.
Stocks include,
- RCG - Biometric
- BNH - Insurance Broker consolidators
- PST, - Software used by many blue chip companies - exciting management
- POLL (just updated the market with some bad news)
- TAN - Electric Vehicles and Ariel Platforms
- QXL - Eastern European Ebay type business
- TAIH - chinese pharm
- HAIK - chinese chemical - risky
- GNG - chinese software
Also, I plan to look over my purchases and sales over the last year
more critically and see if I can form some guidelines for improvement. I will post more on that in the future.
I would really appreciate if you would let me know how your retirement SIPPs is going, or any other investment comment you wish by posting on my blog.