Since my interest in the financial markets started around 2013, I have been bombarded with lectures on ‘the only way to make money investing is….’ mainly from time-served investors and with the occasional guru thrown in, who came into the market two weeks ago. All opinions are the opposite, some promoting fundamental analysis, some swearing by technicals, a lot promoting some dodgy gold miner in the deepest depths of Indonesia and some saying buy amazon. I believe all are right, but right for them, not for me, and probably not for you. It’s best to build experiences and find where you fit.
I am not one of these experienced Investors by far, and I have a basic understanding of the economy. I did poorly at school, as you can probably pick up from reading my blogs, but I write to help me more than anything.
In my learning journey in the financial markets, which is still in its infancy, I have tried and tested different markets to see where I best fit, from forex to commodities, from investing in small caps to trading the big players. I have lost money, but more valuable to me is that I extracted that one little gem that I implemented in my strategy today.
I watched a rerun of ‘Homes Under The Hammer’ this week, and the presenter asked a property investor what his main profession was. ‘I’m sports better’ the investor replied; the presenter pulled a face and replied ‘sounds a bit risky to me; who are you, with your unqualified opinion, to judge how someone makes their money, especially when that person is stood in front of you buying his seventh property! Sports betting is probably not for me, it wouldn’t suit my personality or risk levels, but for this individual, he found something he enjoys and makes money on, and no one should tell him he’s wrong.
I was mainly prompted to talk about this area when I heard of highly respected, time-served investors discussing how to invest this week. You can’t be a long-term investor and a short-term trader simultaneously. YOU can be anything you want to be, and as long as you put the work in, understand the market you’re in, understand the risks, and beat the chosen metric you have decided to measure yourself against, whether this is the FTSE, the S&P or the interest you get in your savings account.
Don’t get me wrong; there are a lot of highly respected investors out there who, without them, wouldn’t be making money today, but choose wisely. On the property side, I can’t recommend Rob & Rob from The Property Hub enough, and my investing knowledge would be nothing without Paul Scott from Stockopedia; the contributors to the Investors Chronicle and stateside Meet Kevin and the Popular investor from youtube are all but to name a few, I’ll do a review on my favourites at a later date. I often see someone who seems very intelligent but swears his way is the only way because he’s survived several bear markets, and you’re stupid for doing anything else. Anyway end of the rant, let’s review the week.
This week I added to my BOOHOO position; BOO now represents 20% of my portfolio with an average price of 230p. A little bit more exposed than I originally wanted to be, but I understand the company and the risks. I am happy to increase my position and monitor the situation closely. The current supply chain problems are still transitory (word of the moment) and will get back to some normality in the near term, albeit some say this could take at least two years. I am seeing the Baltic dry index and container shipping rates coming down slowly, with ship numbers queuing at ports reducing, the US is back open (for now), and oil prices are levelling off. All good for BOO, who are expanding to the US.
The downtrend in the stock price is following the whole sector, with ASOS and BOO falling in tandem. I think BOO can navigate this better than some companies, such as AO, which have lost nearly 80% of their share price since January. Their bulky products require two people to deliver and massive import costs, the majority of BOOHOO products are small and light and sent through the Royal Mails solid delivery network. Working with the Royal Mail, I see BOOHOO products quickly processed.
The problem is getting the products into the country from manufacturers worldwide. Still, BOO seems confident it has this covered, charting a jet to bring in its products and maintaining strong relationships with its importers to help reduce costs.
Christmas parties are now in full swing, and with many planning holidays for next summer, people are excitingly buying boohoo products. The Christmas update will be encouraging, but much emphasis will be put on analysing the gross margins and how much extra we have had to fork out on the additional shipping costs. The supply chain is transitory, so it doesn’t matter, as I’m in BOO for the long run. The reason is that the future is bright; the recent acquisitions, including Debenhams, show how the company is diverging its customer base and moving into new areas and countries, such as the US and the Middle East, all favourable for growth. Boohoo’s work on the Environmental and Social, Governance (ESG) front is positive and will eventually become a pillar of the ESG movement, becoming a stronger company because of it.
Another great company I added to this week was VOLEX (VLX), now 16% of my portfolio at an average price of 340p. The company recently released an update stating the supply chain was an issue but did not change its outlook.
“Having delivered a robust performance in the first half of the year, coupled with a strong forward order book, the board remains confident in delivering on full-year consensus market expectations, absent any material disruptions to our business from the extended lead times that are impacting global supply chains,” the company said.
Traders and investors were spooked at the comments surrounding these short-term issues and not seeing the bigger picture. Revenue is growing at 44.5% at 292.7m, showing strong customer demand for their products. Based on analysts offering 12-month price targets for Volex plc. The average price target is 532.50p with a high forecast of 565.00p and a low forecast of 500.00p. The world is going electric, and there are no ifs or buts. With this comes the need for cables, from charging electric vehicles to building more wind farms and data centres, and Volex cables are highly regarded in the industry with customers such as Tesla.
Another boost came this week as Boris revealed plans for all new homes built within the united kingdom to include EV chargers. With petrol and diesel engines still planned to be banned in 2030, I better get pricing up a new tesla.
The excellent management team is still pursuing more mergers and acquisitions that add immense value to the growing business. The confidence shows with management buying in, with Nat Rothschild (CEO) owning nearly 25% of the company with a recent top-up in October.
I’m happy to participate in this Black Friday Sale of Volex shares and will buy the dip until VLX represents 20% of my portfolio.
I’m conscious of the technicals with Volex; the share took three attempts to break 400p, with the most recent break this year. Every time the share looks to be breaking free, it collapses, but the world has never been so focused on the change to renewable energy as it is now, and the management team is much stronger than ever in the past.
On the daily chart, we’ve had a double top, and the share price has just slipped below the 200-day moving average, so I can see some more falling to the downside before another breakthrough of 400p, then onwards and upwards.
