The analogy part of my theorising is to view in my imagination a multi-cylindered IC engine, a single crankshaft carrying not just single figures but many cylinders. These enclose pistons, they actually represent companies in which I have shares. The overall efficiency of my engine is governed by the compression ratio, the higher the compression the more efficient is the engine. This ratio in turn is controlled by outside influences, State policy, world economics, there’s not a lot I can do about this, that’s a long cycle and I must get back to the more immediate dynamics of my engine.
So as the engine rotates some pistons are up and some pistons down all along the crankshaft and I must sell a company when its piston is up and buy when the piston is down. Or add weight or lighten perhaps to fine tune. Unfortunate things happen along the way, a piston may hole or its rings break but the engine cannot stop, repairs must be made on the run.
Last Friday I made a comment on the DSMR and I wish to expand on it, my use of the 50-day Moving Average. I’m at a stage where I hold a lot of companies and have little cash, my portfolios haven’t done very well over the 16 years I’ve been seriously investing but I do go back as far as Thatcher’s Privatisations. Holding in quite a few , and having no wish to collect more, the option to screen in Stocko isn’t practicable. I’m a risk-taker and may have listened a little too enthusiastically to the SCDR if you know what I mean. So as I wrote last Friday I’ve set up many projects, and as time went by, one at a time all petered out with no holy grail in investing in shares found. A lot of knowledge was gained in the gut-feeling department though.
Then it was time for me to go off on another tangent, to delve into the 50Dma. Creating an Excel file in MS Windows, one Sheet is devoted to the figures of each Friday’s close of day figures and a second Sheet with the same list of companies held is used to record the share prices. Between the two of them the behaviour of my investments can be monitored. It may sound a lengthy process but I cheat with two desktop pcs, one opened…
