Good morning!

Graham here. Paul is taking a long weekend for his birthday.

Markets continue to act in all sorts of surprising ways - the NASDAQ has returned to all-time highs and the FTSE climbed back to 6500 as of Monday before retreating 300 points (6200 in the futures as I type).

Reflecting the uncertainty, the Volatility Index (VIX) has found strength again and is now around 30 - a historically very high level, although we've been much higher than that in 2020.

I hope you are all managing to navigate these conditions - it's not easy! I have taken the 'easy' option of trading virtually not at all, and simply watching the value of my accounts gyrate.

Today I'm looking at:

Finished c. 2pm.

CMC Markets (LON:CMCX)

  • Share price: 217.5p (+9%)
  • No. of shares: 289.1 million
  • Market cap: £628 million

Final Results

Spread betting companies are a very lazy way to invest - compared to having an active spread bet account.

Why bother with all that trading, when you can sit back and make money from everybody else's trading?

Why bother trying to make money in blackjack and poker, when you can simply own the casino?

I should have held on to the CMC shares I bought last year. The share price has more than doubled since.

Instead, I focused on my shareholding in IG Group (LON:IGG) - one of my top 5 holdings. IG is in my view likely to be the lowest-risk share in the spreadbet industry, with CMC coming in at second place.

This entire industry has enjoyed a bizarre windfall from the Covid-19 pandemic. Government lockdown policies crashed the Western economies which in turn sparked stock market chaos and drove traders (both old and young) to churn their accounts like never before.

Let's see how CMC did for FY March 2021:

  • net operating income +93% to £252 million
  • PBT explodes to £98.7 million
  • EPS explodes to 30p

It almost sounds too good to be true, and I am nervous that it is.

Last year, as flagged in my analysis of CMC's interim results, the company changed its risk management strategy.


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