What's happened to my portfolio in the last 2 weeks?!

PenguinJim

TCA wrote: »

Jim, BRWM closed today at 334.50 in case you're still thinking about buying. BRCI is starting to tempt me but it's still on a 3% premium.

Thank you!

I'm really not sure if I'm going to invest in them or not. It would be a long-term hold, and I can't know if this drop in the price of iron ore is actually a correction in an overvalued material, plus the development of so many new "greener" materials as alternatives, plus the unresolved Ebola situation, plus the lack of tangible assets in a mining company's portfolio... it looks like a good price for a higher-risk stock, but as much as I enjoy gambling (and I really don't have much else to do with my cash anyway), I'm just not sure. What I need to do is check the two Motley Fool articles that will cover this subject - naturally, they will write one positive article and one negative article, so that they can point back in future and show how right they were. Hmmm. Looks like they haven't been written yet. Well, I can do it for them! (It's quiet in the office today, so I need to procrastinate.)

Should You Buy BlackRock World Mining Trust Plc?
BlackRock World Mining Trust (LSE: BRWM) has dropped down to 334.50 today, closing at a new 52-week low.

The company captured headlines last month when a contract they had with London Mining, valued at £47.8m, was written down to zero in the wake of London Mining's collapse (pun intended). In addition, Blackrock World Mining also lost the total value of a convertible bond they had placed with London Mining, valued at £4.6m. The loss of these valuable investments resulted in an immediate drop in the share price of 8%.

Shafted
Despite a slight recovery over the past month, Blackrock's shares have dropped again this week, over possible concerns that the dividend will have to be reduced.

With a P/E of 10.14, Blackrock remains one of the better-performing stocks in the mining industry. However, many investors warn against strong positions in mining, citing a relative lack of net assets and an increasingly unpredictable income over time. Indeed, many investment managers are increasingly bearish over mining stocks in general, with Neil Woodford recently citing Rio Tinto's $25bn loss from its 2007 purchase of Alcan for $38bn as one of many reasons to avoid the industry. The London Mining fiasco is just the latest of many.

Blackrock Minging?
The London Mining debacle is a black mark on the records of the trust’s management team, and may have irreparably damaged the company at a critical time for global mining. The unresolved Ebola crisis has cost companies with African interests millions of dollars, and the end is not yet in sight. The drop in iron ore prices may in fact be unrelated, reflecting both a decreasing dependence on iron ore and a more accurate valuation of the material.

For this reason, we feel that Blackrock Mining will not be able to maintain its 5.5% dividend, and that the worst losses are still yet to come.

On the other hand, if it's growth AND income you're looking for, analysts here at PenguinJim's computer have identified three shares that we believe have the potential to quadruple profits within the next four days. So, if you're looking for ideas, sign up for an account with me and download "Why Am I Reading This".   The report is completely free, but you've only got a limited time to claim that you clicked on it by accident.

Hmmm... sounds like I shouldn't buy. Wait a second... they've (we've?) done another article!

BlackRock World Mining Trust Plc: the Perfect Mining Investment?
BlackRock World Mining Trust (LSE: BRWM) has dropped down to 334.50 today, closing at a new 52-week low.

The company captured headlines last month when a contract they had with London Mining, valued at £47.8m, was written down to zero in the wake of London Mining's collapse (really? You're not even going to change the pun?). In addition, Blackrock World Mining also lost the total value of a convertible bond they had placed with London Mining, valued at £4.6m. The loss of these valuable investments resulted in an immediate drop in the share price of 8%.

Nevertheless, as the saying goes, ‘say all the answers and you'll get the question right’, and with another small drop today, now could be the time to buy BlackRock World Mining Trust shares.

What's Yours is Mine
You may be surprised to learn that, as a percentage of overall assets, London Mining represented a fraction of the trust’s total pool of investments. Just look at the trust's three largest holdings: Glencore, Rio Tinto and BHP Billiton account for 35.8% of their assets, and these titans of the mining industry are unlikely to go out of business any time soon.

We Serve Miners
The company now has a P/E of 10.14 and a market cap of 588.78M, making it truly a heavyweight of the industry. If you’re looking to invest in global mining, BlackRock World Mining Trust appears to be your best bet. Their core holdings are some of the biggest miners in the world, and have proven time and time again that they can outperform the smaller mining companies. With their experienced management team and 5.5% dividend, we think Blackrock Mining represents an excellent opportunity for both growth and income at a bargain price.

Of course, it's not the only stock that can offer both income and growth. That's why we have named eight shares that will allow you to retire next month.

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Wow. Well now it's obvious what I should do about BRWM! :beer:

TCA

PenguinJim wrote: »

These eight companies will make you irresistible to your partner of choice, and also stimulate follicle growth to reduce male pattern baldness. Just click here to download the report - there's no obligation to admit to anyone else that you've done this. Wow. Well now it's obvious what I should do about BRWM! :beer:

I'd love to be of assistance but having bought BRWM at £4.50 my views don't count for much! I won't be selling though and will be following the same approach as I take for my receding hairline - don't touch it!

Financial_Saddler

So, after the volatility of September and October, the outcome is that the "overvalued" US actually recorded further increases in the Dow, Nasdaq and S&P, whereas the UK responded with significant decreases in the FTSE100 and FTSEAllShare.
At the moment, this particular CAPE does not seem to fit...

Ryan_Futuristics wrote: »

Probably not

At recent valuations (a CAPE ratio above 25) the US market's only returned on average 0.5% annualised over the following 10 years ... (that's since about 1927)

I've got a total allocation of about 3% in US markets now (I'm trying to lower it ... although it could still have a good run in the short-term with further stimulus, it's not good value)

The big question is whether the FTSE 100 will continue to track US markets so closely when valuations are really quite different

No one can answer that one - so I'm taking the opportunity to buy in Europe and Emerging markets (where things are at least looking cheap ... Some would say best opportunity in a decade cheap)

When it comes down to it, I've got more faith in valuation than in markets behaving as they may have in the past

Financial_Saddler wrote: »

The oddity that always strikes me when there is a bout of volatility is that the UK market tends to exaggerate any US market movements on the downside, and then tends to undershoot US market movements on the upside.
It makes me wonder whether, exchange exposure notwithstanding, I should actually be investing more in the S&P and less in the FTSE.
Perhaps someone has some empirical evidence?

kangoora

No evidence but it's something I've seemed to notice also. If the US markets fall ours seem to plumment lower in comparison and likewise the gains seem to be less.

Whether this is actually in fact happening I don't know, but it certainly seems that way to me.

Ryan_Futuristics

Financial_Saddler wrote: »

So, after the volatility of September and October, the outcome is that the "overvalued" US actually recorded further increases in the Dow, Nasdaq and S&P, whereas the UK responded with significant decreases in the FTSE100 and FTSEAllShare.
At the moment, this particular CAPE does not seem to fit...

Firstly, CAPE ratios have virtually no correlation with 1-year returns (let alone month-on-month returns) ... Short-term market movements are driven by a combination of investor sentiment, irrationality, news and pure chaos

Valuation metrics tell you one thing: whether you're likely to be buying cheap or expensive ... They tell you what the share price doesn't, which is what the money you invest represents in terms of company earnings, or the value of a company's assets ... 'What are you getting for your money?'

While short-term markets are driven by excessive greed or excessive fear, over the longer term, valuations struggle to stay persistently high or persistently low ... The US could double again over the next 5 years, but history tells us it's got a bungee cord strapped to its back

Here are average market returns over 15-year periods at various CAPE ratios:



The S&P 500 today is around 26

Now you're not trying to make a prediction about any one region or time period - you're just choosing whether you buy cheap or expensive ... Buying cheap generally works out better

In simple terms:

- Buying expensive and diversifying is always di-worsifying (the more chances you give mathematics to work in your portfolio, the more likely it is to work)

- Likewise, buying cheap and diversifying gives you more opportunities to benefit from upward mean reversion

Ryan_Futuristics

kangoora wrote: »

No evidence but it's something I've seemed to notice also. If the US markets fall ours seem to plumment lower in comparison and likewise the gains seem to be less.

Whether this is actually in fact happening I don't know, but it certainly seems that way to me.

The FTSE 100 and Dow Jones tend to correlate very closely ... It is a concern

The UK looks cheap going by its CAPE ratio, but expensive by most other metrics ... So it's possible the UK and US are both overvalued

However it's not certain the UK is, and the UK's paying a much better dividend, so it's a better bet (in my books)

PenguinJim

Having been on the same page as El Selb last month with all of those irritating red numbers, I'm now increasingly irritated by all of these green numbers! :mad:

It barely affects me if my portfolio takes a dive. It could drop to 1% and stay there for 19 years with only the offcuts from the DRIP affected - as long as it's hit all the right numbers in its 20th year.

But as I'm still moving money into investments every three months, it's going to be more expensive for me if those numbers keep on greenin' every day!

Red numbers = unhappy that a largely meaningless value of my portfolio is lower.
Green numbers = unhappy about the rising costs of investing further.

I guess I'm a glass-half-empty kinda guy!

Are you with me on this, El Selb?

JohnRo

I agree, same boat, in my income portfolio at least.

The valuation is almost an irrelevance at this stage as long as the dividend income is maintained. All I care about is buying the income as cheaply as possible over the next few years and was looking forward to some substantial averaging down. That prospect seems to have evaporated just as quickly as the valuation gains did at the end of September...

The big question mark for me is how much of the valuation and so called market has become a total fabrication created by omnipotent central banking politburo dictates via crony capitalism and captured government, mountains of counterfeit cash handed over to bailout privileged casino banking clients and protect profits and lifestyles at public expense, alongside artificially suppressed interest rates. There is definitely a disconnect imo between the financially engineered stock market, asset price bubbles everywhere, and the struggling real economy it's supposed to be linked to.

No idea how its all going to pan out though, once the inevitable sovereign debt crisis explodes, it'll probably end with serfdom or revolution and war if history has anything to say on the matter.

I'll just keep investing regularly and hope that it all works itself out in the end.

Ryan_Futuristics

The moment you start wishing for red numbers instead of green is the moment you start developing the contrarian mindset (greed in times of panic; fear in times of exuberance ... which generally works out pretty well)

Many predict a sideways market for the foreseeable future (neither good for capital accumulation or buying opportunities) - every time it looks like the tide's going out, someone else jumps in with more QE (Japan today, probably the EU tomorrow, and you can't rule the US getting back in if things stagnate)

But you could be waiting another 5-10 years for a good buying opportunity ... However in some parts of the world (like Russia) things are almost as bad as they can get - and many parts of Europe are around historically low valuations ... Some would say - despite murky waters in many of the major markets - there are currently once-in-a-decade buying opportunities out there if you can handle less certainty

Glen_Clark

A_Flock_Of_Sheep wrote: »

The wheels have come off. It's all heading south from now on folks.

That post marks the turning point when it all started heading north .......