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The Shifting Shares view: Michael Taylor reviews his performance in 2019

2019 was a much better year than 2018 – as I said on writing a trading journal I wasn’t too happy with 2018 and so my process needed to improve.

I’m always impressed with those who are able to calculate with absolute precision to two decimal places their percentage returns for the year, though I imagine for some it’s very easy if a simple £20k deposit is made with no withdrawals.

I haven’t made a net deposit since 2016, and withdraw cash from my accounts every month or two to pay bills, and switch cash around accounts. To calculate my percentage return, I’d have to calculate a time-weighted return and take into account cash withdrawals and the time cash was not in the portfolio. As I’m not a hedge fund, I simply can’t be bothered to do all of that work, and the only person I answer to is my wife – and she’s happy so long as I’m making money.

However, I do focus on the process. I like to look through all my trades and see where I went wrong.

I traded a lot less this year, as I spent nine months of the year on the road travelling. The quality of my trades was also much improved, and cash was consistently my biggest position.

All of my mistakes this year can be tracked back to two things: not cutting quick enough or getting the entry wrong.

Thankfully, the first one is not something I do often. I’m unemotional when it comes to cutting losses – I don’t ever get tempted to run it. This is because my position sizing is small and the vast majority of trades are pretty insignificant compared to my total portfolio.

The way to grow and compound the account is to build on each trade and allow my edge to play out over the long run. I know that breakouts work. I know that breakdowns work. I know that gaps work. I know that I can spot a good opportunity in the market and with good risk/reward management I can trade it. My goal is to not go back to work, and so long as I stick to the plan and keep my positions small so no single position can seriously damage me, I have a good chance of continuing to grow the account so long as I keep putting the work in.

My portfolio took a hit in January 2019 with a large percentage loss with 7digital. I was asleep at the wheel here. I’ve learned not to invest in a stock unless it’s self-sustaining, otherwise I’m just gambling that they’ll be able to turn an operational profit before the company’s cash runs out. I also ignored a downtrending chart. The loss was entirely my own fault, but there’s no feedback better than losing money to tell you that what you’re doing is wrong.

In 2019 I traded a lot more SETS stocks. Whilst I still love AIM and penny garbage, it’s a lot easier to get in and out of liquid stocks, and you can take bigger positions. I enjoyed playing a part in setting the spread on Rockrose Energy for a while as it consolidated, clipping 5% off here and there frequently, and enjoyed a big rise from sub 500p all the way to the relist, cashing out a large amount above 2000p.

Future (in from around 250p) and Greggs also joined the party, as well as Bidstack (which I sadly sold far too early). I would’ve done well had I managed to get borrow above 40p, but it joined the list of Trades That Were Not Meant to Be.

I am feeling bullish for 2020, and have started stepping on the gas a little. Stocks are moving, liquidity is improving, and since the Boris Bounce there is a renewed enthusiasm. Perhaps, just maybe, if Brexit can be resolved we could see a continued rally after what has been eighteen months or so of tough times.

Interestingly, Gervais Williams of Miton believes we could be at the start of a new secular trend. That would be nice.

A happy new year to all!

My lessons from 2018

  1. Don’t invest in a stock unless it can sustain itself without external funding
  2. Don’t ignore a downtrending chart
  3. Focus on getting better entries

Author Michael Taylor’s website www.shiftingshares.com contains a number of tutorials on how to trade and invest as well as his free book – ‘How to Make Six Figures in Stocks’.


Valuethemarkets.com, Digitonic Ltd (and our owners, directors, officers, managers, employees, affiliates, agents and assigns) are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above.

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

  • James Moore does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.
  • James Moore has not been paid to produce this piece by the company or companies mentioned above.
  • Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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