Robbie Burns interview - Lunch with the Naked Trader

Wednesday, Jan 27 2016 by
Robbie Burns interview  Lunch with the Naked Trader

Ahead of taking him to lunch at his favourite restaurant, I’d agreed to meet Robbie Burns at his office (a second home) on the banks of the Thames in west London. It later transpires that the place has been be a pretty smart speculation in London’s booming property market. But after a couple of hours with him it’s clear that like a lot of things, Robbie’s relationship with wealth is at times both serious and fairly easy going.

He’s a man content and appreciative of his own success and the comfort that it’s given his family. But there are no flashy cars or expensive hobbies. In fact, material details don’t always matter to him. You start to see that as soon as you reach the front door…

“The doorbell isn’t working at the moment so call me when you get there!”

Robbie Burns is the Naked Trader. A decade after writing his eponymous guide to ‘how anyone can make money trading shares’, it’s now in its fourth edition. Over the years his loyal readers have followed him through booms, crashes, bubbles, successes and failures. He’s won a place in their hearts for his no-nonsense, down-to-earth prose that literally laughs in the face of complicated investment speak. By keeping things simple, wearing mistakes on his sleeve and encouraging individual investment he’s built a very successful brand around himself.

Later this year there’ll be three more books from him. Among them will be an update to The Naked Trader’s Guide to Spread Betting, a second on trading psychology and the third will be Robbie’s debut novel.

While the original book is cheeky, laddish and readable, there are some hard-hitting messages in it. For a start, it’s clear he’s very sensitive to the risks of behavioural mistakes. He frequently warns about the perils of making decisions driven by emotion. Deep down, the book is about taking a checklist approach to trading. He suggests looking for profitable, growing companies that aren’t debt laden. Dividends are important (mainly to cover trading costs), the shares have to be reasonably priced and they need positive price momentum behind them. He also take a ruthless view on losing positions, cutting early, often with a stop loss. It’s a strategy that makes a great deal of sense, but it needs discipline too.…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>

Do you like this Post?
106 thumbs up
0 thumbs down
Share this post with friends

29 Comments on this Article show/hide all

Bearbull 29th Jan '16 10 of 29

The interviews are indeed entertaining but nothing more. The chance to discuss the most interesting screening criteria of the Naked Trader esque Screen was unfortunately not used. In my view it would have been interesting for the subscriber of Stockopedia to learn how Mr. Burns defines his basic universe of stocks from which he then filters stocks. (are financials, utilities, insurances included or excluded as Greenblatt does?) Further it would have been helpful when the specific filters / rules of the Naked Trader Screen would have been discussed with Mr. Burns. For example why the “%vs. 52 Low >5” rule is used?

The Stock Rank should actually be the ultima ratio of all Guru Screens in a secular bull market. I observe a little dumbfounded that with NAPS, Contrarian Screens, Lord Lee; Naked Trader and so on we get presented more and more new cooks. By definition, these chefs can only be worse than the StockRank. Otherwise, the StockRank would be flawed and needs to be improved.
Also in the discussion of strategies there regularly is a lacking of detailing the time-frame for which a strategy is aligned. Also the monitoring effort for a strategy should be noted. Is Mr. Burns checking his positions hourly, daily monthly?
From my perspective, the Stockopedia user gets little help from the presentation of constantly new chefs. I think it would be more interesting to give long-term users of Stockopedia a chance to speak. The Stockopedia user could learn from these long-term users how they arrange their fork of a screen and why, with which effect they use a certain filter criteria.
The single investor simply has no time to try out all 63 Guru-Screens. If he tries I am afraid he will not be an investor in but a processing case of diginity before he has testes strategy number 15...

| Link | Share | 1 reply
ajlo 29th Jan '16 11 of 29

Good interview, thanks. I had not looked at any of Robbie Burns books in the past because it says trader and thought its not for me. However, last year I got curious after seeing the performance of the stockopedia screen for his style of investing. Then read his current book and liking his ideas attended the seminar day. It appears to me that for much of his activity it starts as a trade, in/out see how it goes. If it continues to be a successful business and share price he remains on board and therefore it is a long term investment. Some key points were, manageable debt level, share demand on level 2, an understandable profit making business at a good price. Good common sense investing that I find is trickier to put into practice than it ought to be.

| Link | Share
tony proctor 29th Jan '16 12 of 29

I think Bearbull above as a point.

| Link | Share
Velo 30th Jan '16 13 of 29

Enjoyable to read interview.

Stop losses mentioned as a cornerstone of R.Burns methods are often presented as a firm, must-be-obeyed level, by investment Gurus - or on the other hand by other Gurus as held for use mentally rather than automated; and thus avoid tree-shakes, and all manner of short term market irrationalities etc., that are unconnected with the individual company's actual performance. Whatever it appears to work for them, and in general it's a good commonsense approach.

However, the truth is INMO, it all depends on that individual share (not the risk tolerance stop loss set across the board to all shares regardless whether automated or mentally held) I don't think they all obey a universal rule. Could it be that preset stop losses fit with that investors particular risk tolerance style of operation and thus state stop losses as a universal law?

- It's why Gurus ALL admit to making some losses - despite following their own rules, sometimes things still just don't go right. In other words it's next to impossible for successful investors not to have some occasional disappointments. Hence they say that's what stop losses are for.

2 or 3 years back I let one share fall by over 20% on my buying-in SP and was reading O'Neil's book about must-set-stop-losses at 7% or 8% regardless. So I sold. A few months later that same share appeared to be making a comeback and I thought I'd try again.
You've guessed it - it promptly went on another decline, this time I gave up and sold again at over 12% loss as I was still under Guru O'Neill's spell of shudda sold at 7 or 8% losses and castigated myself for not adhering to O'Neill's 7% / 8% set stop losses.

I've since left that share running, for the past couple of years, in one of my watchlists set at the initial price I first bought back then. Today it has steadily progressed since those days to be sitting 40% up on that original buying price - had I not sold at all!

That share was, and still is, a FTSE100 share - REL (although it's changed it's name these days) was then and still is mostly highly regarded by analysts, yet I treated it like some high risk share and an all purpose stop loss on that occasion cost me dearly (Less if I'd adhered strictly to a stop loss, but still cost me). I also have examples in my current portfolio where adhering to a strict across the board stop loss policy would have most definitely saved me money :)

It all depends on the individual risk of the share in question INMO. Nowadays, I don't use set stop losses per se, rather I use selected TA indicators to assist entry and exit points.

Yes, I still get occasional disappointments - in most, but not all cases, it's where I've over-ruled my TA chart indicator findings - not some arbitrary-applied-across-the-board personal risk-tolerance % stop loss figure.

| Link | Share
clarea 31st Jan '16 14 of 29

Anyone know which basis of profit Robbie uses for the 3 debt rule, operating or net profit ?


| Link | Share | 1 reply
Weasel 31st Jan '16 15 of 29

In reply to post #120113

It's pre tax profit, as far as I know.

| Link | Share
clarea 31st Jan '16 16 of 29

Would that be net profit on stockopeida company stats then ?

| Link | Share
clarea 31st Jan '16 17 of 29

Sorry meant to say would that be operating profit ?

| Link | Share | 1 reply
Bearbull 31st Jan '16 18 of 29

Meaning? INMO? = Internal Monolog? TA indicators? = Technical Indicators? , which ones?

Of course you are wright; every share has its own "implied volatility" or "beta". If you want to trade single shares in a William O'Neil or Kevin Marder (Market Watch) breakout system / concept, read Brian June / Van K. Tharp about money management and how to calculate stop-loss based on your loss tolerance.

But at the heart of Stockopedias concept lies the PORTFOLIO of 20-25 shares and NOT SEVERAL BETS on single shares (= gambling approach)!
The holding-period is 3 to 12 month (quarterly or yearly rescanning and rebalancing)
For investors* who follow the Stockopedia approach the portfolio itself is the primary stop-loss in a secular** bull market. That means the portfolio as a whole does counterbalance the "beta***" of the individual liquid traded**** shares in the portfolio. The selection of the 20-25 liquid shares based on their Stockrank(TM) *****should basically help to avoid bad surprises (certain events are not detectable / trackable neither in price-events nor with fundamental ratios)

In the context of a 20-25 liquid shares portfolio activated stop-loss orders at your broker on all 20-25 shares have only the function of an emergency stop-loss. Therefore in a healthy market they basically should be put in place only when you are on a vacation or have no time for a monthly check (and only monthly and not daily ! ) of the 20-25 positions.
The distance should be wide > 14% (read Stop losses: Help or Hindrance? Dr. Bruce Vanstone)
"If you can't sleep at night then the risk is not right" (Ed Seykota) and you should reduce the amount of money you have in the stock-market as a whole.
"If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks" John Bogle (Vanguard)
By the way Farrell's (USA) eight "lazy portfolios" were (minus!) -28.3 % till - 43.5% over 12 month at the beginning of 2009. But: "to win you have to be in" Tweedy Browne (= vicious circle of stock-investors ).

The importance of the quality of the Stockrank (and the many other ratios) for Stockopedia subscribers is the reason why I think the Stockopedia team should give more information about (= make more transparent) how the data from Reuters is used to calculate the different fundamental ratios (especially for banks-, insurance-, property- and specific companies, where things are not always obvious). Further the most important numbers in the income-, balance- and cash flow statements (especially sales and operating cash flow = least manipulated) should be accessible in the "Table Editor" in the "folios" for at least the last three years. Users can then "adjust" the Stockopedia Rank system to their stock-univers (US, UK, FR ....) from which they equip their portfolio. This would also help to avoid crowded trades and frontrunning by market maker (in case of non electronically executed trades) if too many subscribers uniquely use the StockRank as selection criteria.

(*investors go long only and holding period >= 3 month, traders go long + short in shorter time frame)
(**secular bull market = a market driven by forces that could be in place for many years, causing the price of a particular asset class to rise over a long period of time (Investopia))
(*** beta describes the relation of a single share to its market as a whole)
(**** liquid means daily trading volume of 10-20 times your single position size and no micro caps were prices can be manipulated by one single agent)
(***** or your individual fork of a base screen)

| Link | Share
snickers 2nd Feb '16 19 of 29

Readers might like this graph of the Naked one's trades, made from the table on his website. Lines link buy and sell points. The vertical scale is logarithmic so the lines aren't all bunched up.


The paler blue colours are higher value trades. & the accuracy depends on whether his website is updated correctly of course. Nudists are notoriously bad at that.

I'd say this confirms that he runs his winners, cuts his losers. He also seems to get out of a trade quite fast, quite often. I don't know what I'd infer from the pattern of trades in 2009: skittish, guessing the bottom? 

I believe he watches for dips, and nips in and out again on a resumption of the normal trading level. So he must have software which flags these situations up? 

& lastly, he says above that he never averages down any more: you can see, bottom right, him doing that (4 lines converging) but he escapes with his dignity intact.

| Link | Share
PhilH 2nd Feb '16 20 of 29

Hi snickers,

I love the graphs you put up from time to time.
What is the vertical axis? Is it price rescaled in some way?

Thanks in advance

Professional Services: Sunflower Counselling
| Link | Share | 1 reply
snickers 2nd Feb '16 21 of 29

In reply to post #120284

2.0 is 100p, 3.0 is £10
so most of his current buys are £1 to £4 or so. No more penny shares..

| Link | Share
Toyin 3rd Feb '16 22 of 29

In reply to post #119903


I think you will find in "The Art of Execution" the most successful traders were the hunters who doubled up on stocks when down 20-25% (subject to the story not changing). I agree that in some cases cutting quick is the right thing to do but in others it is not, especially when the markets are as crazy as they are now. It just proves the point of find your own way and follow it. One size does not fit all.

| Link | Share | 1 reply
Noodle Hat 4th Feb '16 23 of 29

In reply to post #120401

thats true, although you have to have high conviction and knowledge of your shares to justify doing so! If for instance your applying more of a "NAPS" type portfolio then by design you probably don't have an indepth knowledge of each stock and therefore can't make that educated call.

| Link | Share
andrewchat 13th Feb '16 24 of 29

I wonder what his 'get out quick' threshold is? I assume <5%? Anyone know?

| Link | Share
ajlo 4th Mar '16 25 of 29

In reply to post #120122

Pre tax profit Clarea and taken directly from the company accounts. He says not to trust third party figures.

| Link | Share
RichardEllis 11th Oct '17 26 of 29

That was inspirational. This is a man I have admired for quite a few years & I even read his (first) book. If one thing in the interview stood out - for me - it was his scary warnings about "confirmational bias". I am aware of this but fighting it is so hard. His approach to combating it is very practical, I like it!

| Link | Share
pedtrader 13th Oct '17 27 of 29

Thanks for posting this article. I too would like to know the nitty gritty on how the Naked Trader screen matches up with Robbie's thinking. Also, get out fast? what is that threshold? Surely the trading costs will rack up quickly if he is getting in and out on a trade multiple times?

| Link | Share
iwright7 13th Oct '17 28 of 29

Could I suggest that you go on his course(s) down at Heathrow. They run most months and you can get the information from the horses mouth. I have been and highly recommend. Ian

| Link | Share
thomaspam 19th Apr '18 29 of 29

In reply to post #120011

Read Robbie Burns books in which he explains the strategies mentioned or even better go to his seminars.

| Link | Share

Please subscribe to submit a comment

About Ben Hobson

Ben Hobson

Stockopedia writer, editor researcher and interviewer!


Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis