Keith Law SA Fin

Private Share Trader and Website enthusiast

274 Nicholson St Orbost Vic 3888 Telephone 03 5154 1232

Share Trading

As at 18 July, there has been a bounce in US markets that has not quite carried forward to our market although banks have recovered from their absolute bottoms. I have recently bought some BHP shares as sentiment has fallen and the price is more realistic under $40.

2007/2008 Financial Year has been my worst result since I started trading 14 years ago! As a share trader I mark my trading stock to market price thus bringing into my trading result the unrealized losses. The value of my trading stock on hand at 30 June 2008 valued at 30 June 2007 prices shows a fall in value over the year of of a 41%. To get back to the value of 2007 prices requires a 69% increase in current values. Luckily, I have not held these stocks for all of the year and my trading activity has mitigated these falls. Nevertheless I have suffered a significant fall in the dollar value on my trading stock . In cash flow terms the income received from these investments has remained strong and produced a two fold cover on interest payments on my margin loan. In a bear market as currently exists it is not only the falls in market value of the stock that causes pain but the ongoing trading costs and need to draw down living expenses that exacerbates the pressure.

I remain substantially invested with holding over 11 stocks. When looking at the difference between the stocks I held in 2007 and the stock I hold as at 30 June 2008, I have removed speculative stocks from the portfolio and diversified across significant companies with solid financial positions, You can not pick the bottom of the market just as few people picked the top. You need to be invested to get the full benefit of the rebound which can happen unexpectedly and quickly.

My total investments remain well diversified with 85% in an allocated pension and 15% in an active  trading account. This is my asset allocations including both my Margin Loan Account and Allocated Pension. I have recently began moving small amounts out of bonds into stocks.

I currently have a margin loan with Commsec ( Commonwealth Bank ) where it is definitely a mortgage agreement. I have reduced my lending ratio to have a 20% buffer before a margin call would be triggered. I have a stop loss strategy that will exit me fully well before a further 20% decline.

 This website covers my website hosting and design services.