Spread Betting Magazine v30

JU ED LY IT 14 IO N

MAGAZINE

SPREADBETTING

Issue 30 - July 2014

The e-magazine created especially for active spread bettors and CFD traders

Foundations of sand?

How to play the booming UK housing market

OURST E G G I B TION EDI T! YE

www.financial-spread-betting.com

THE UK’S ONLY FREE ONLINE FINANCIAL MAGAZINE! ZAK MIR INTERVIEW SPECIAL DAVID LENIGAS

A DAY IN THE LIFE OF A FTSE BINARIES TRADER BY JOHN PIPER

ZAK MIR’S MONTHLY PICK LONMIN

HOW TO USE THE 52 WEEK HIGH INDICATOR TO GENERATE EXCESS RETURNS

AND MUCH, MUCH MORE - PACKED FULL OF TRADE IDEAS FROM ALL OUR CONTRIBUTORS!

Feature Contributors Robbie Burns aka The Naked Trader Robbie Burns - The Naked Trader has been a full-time trader since 2001 and has made in excess of a million pounds trading the markets. He’s also written three editions of his book, “Naked Trader” and the “Naked Trader Guide to Spreadbetting” and runs day seminars using live markets to explain how he makes money. Robbie hates jargon and loves simplicity.

Dominic Picarda Dominic Picarda is a Chartered Market Technician and has been responsible for the co-ordination of the Investor’s Chronicle’s charting coverage for four years. He is also an Associate Editor of the FT and frequently speaks at seminars and other trading events. Dominic holds an MSc in Economic History from the LSE & Political Science.

Richard Jennings Richard was the founder and original inspiration behind Spreadbet Magazine. A prolific trader for many years and former institutional fund manager, he holds the CFA designation and now runs the unique tax free investment house www.titanip.co.uk. A natural contrarian and true to his Yorkshire roots, his primary investment approach is of a value bias.

Samuel Rae Having completed his Economics BSc Degree in Manchester, Samuel Rae quickly discovered that the retail Forex industry was for him. His personal trading style combines classic candlestick analysis with a simple, logical and risk management driven approach to the financial markets - a strategy that is described and demonstrated in his best selling book, Diary of a Currency Trader.

Alpesh Patel Alpesh Patel is the author of 16 investment books, runs his own FSA regulated asset management firm from London, formerly presented his own show on Bloomberg TV for three years and has had over 200 columns published in the Financial Times. He provides free online trading education on www.alpeshpatel.com.

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Editorial List EDITORIAL DIRECTOR Richard gill

Foreword

EDITOR Zak Mir

“May you live in interesting times” is supposed to be a Chinese curse, even though it is not a phrase which is actually Chinese. I was reminded of it after reading a recent interview in the Financial Times with billionaire Zhang Lei. The financier was boasting how the world’s second largest economy is now winning in so many ways against the 20th Century’s economic leader.

CREATIVE DESIGN Lee Akers www.cfdmedia.co.uk COPYWRITER Seb greenfield EDITORIAL CONTRIBUTORS Dominic Picarda Robbie Burns Alpesh Patel Richard Jennings Filipe R Costa Simon Carter James Faulkner Samuel Rae Anton Kreil John Piper

Disclaimer Material contained within the Spreadbet Magazine and its website is for general information purposes only and is not intended to be relied upon by individual readers in making (or refraining from making) any specific investment decision.

Spreadbet Magazine Ltd. does not accept any liability for any loss suffered by any user as a result of any such decision. Please note that the prices of shares, spreadbets and CFDs can rise and fall sharply and you may not get back the money you originally invested, particularly where these investments are leveraged.

In comparing the investments described in this publication and website, you should bear in mind that the nature of such investments and of the returns, risks and charges, differ from one investment to another. Smaller companies with a short track record tend to be more risky than larger, well established companies. The investments and services mentioned in this publication will not be suitable for all readers.

You should assess the suitability of the recommendations (implicit or otherwise), investments and services mentioned in this magazine, and the related website, to your own circumstances. If you have any doubts about the suitability of any investment or service, you should take appropriate professional advice.

The views and recommendations in this publication are based on information from a variety of sources. Although these are believed to be reliable, we cannot guarantee the accuracy or completeness of the information herein.

As a matter of policy, Spreadbet Magazine openly discloses that our contributors may have interests in investments and/or providers of services referred to in this publication.

While it may not be long before China is way ahead of the US in GDP terms, I would venture to suggest that when you have a command economy and do not need to consider such peripheral matters such as democracy, free speech, the environment or even getting GDP figures to be entirely accurate, it ain’t too difficult to be number one. Nevertheless, one presumes that with new found success, Western style openness will eventually penetrate China’s Great Wall.

Not that we in the West are without our difficulties. It is to be noted how 11 years after the Iraq invasion in 2003 and in the run up to what was supposed to be a withdrawal from the strife torn country, one of the worst examples of attempted nation building is coming apart at the seams. We have been treated to predictable spikes in gold and crude oil with the ISIS advance. However, it remains to be seen if the equally predictable consequences of ill advised regime change and manipulation provide the US and its allies with a Vietnam style defeat or simply an ongoing geopolitical sore.

From the perspective of Spreadbet Magazine, it could be that the troubles in the Middle East kill the post financial crisis economic recovery and end the record equity market bull run for the US. Richard Jennings of Titan Investment Partners has been championing the bear argument since the turn of the year.

The question now is whether a bubble burst is on its way, not only for stocks in the US, but also the housing market in the UK. Interestingly enough, it would appear from commentators doing the rounds currently that a “melt-up” is now just as likely as a meltdown, even though we are well on the way in terms of QE tapering in the US and autumn interest rate rises in the UK. In this month’s issue we have several special articles focussing on how to play the UK housing market.

Perhaps, rather ironically, it may be that new QE in the eurozone will actually win the battle in terms of adding inflationary fire to growth in this troubled space. The way that US firms such as GE and Pfizer have been looking across the Atlantic to make deals of late underlines this idea as a possible H2 2014 driver.

Closer to home, I had the pleasure of interviewing a man who I regard as a “one person stock market”, and certainly an example of how to be an entrepreneur of the most active variety: David Lenigas. Although I am aware he may not be everyone’s cup of tea, and what is called these days a “Marmite” character, the 26 minute interview on TipTV was open, informative and gave considerable insight into how Mr Lenigas ticks, as well as the prospects for the 15 companies he is a board member of. Read the transcript of the interview on page 18.

Enjoy this month’s issue and happy trading.

Zak

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Contents

Titan Investment Partners chalks up a stunning one year returns anniversary Fund manager Richard Jennings takes a look back at an impressive maiden year for Titan

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16 24 45 52 72 86 90

Three small caps to benefit from the housing boom James Faulkner of t1ps.com looks at three companies which look set to see bigger profits on the back of the UK property boom

Fund Manager In Focus Distressed company and contrarian investor extraordinaire, David Tepper of Appaloosa Management, is in focus this month

Dominic Picarda’s Technical Take Continuing the housing theme, Dominic Picarda looks at the charts of three housebuilders

Using the 52 week high indicator to generate excess returns Richard Jennings of Titan Investment Partners & Filipe R. Costa look at how to generate alpha using this market indicator.

A Day in the Life of a FTSE Binaries Trader The “Psycho Trader” John Piper explains how he trades the markets in this month’s binaries corner special

Zak Mir’s Monthly Pick Following the end of the strikes in South Africa, Zak Mir’s top pick for July is platinum miner Lonmin

The Best of the Evil Diaries Highlights of what infamous short seller Simon Cawkwell (aka Evil Knievil) has been trading this month

Robbie Burns’ Monthly Trading Diary Back by popular demand, Naked Trader Robbie Burns looks at five bombed out companies to recover over the summer

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Foundations of sand?

World Cup Spread Betting Update & The Open Preview

James Faulkner of t1ps.com looks at the macro picture for the UK housing market

Patrick Callaghan of Sporting Index updates on the teams competing at Brazil 2014 and looks at the upcoming Open golf championship

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97 102 106 110 114 118

Zak Mir interviews David Lenigas SBM editor Zak Mir interviews man of the moment and “one man stock market” David Lenigas

Anton Kreil returns!

Following up on last month’s interview with Zak Mir, Anton Kreil gives more valuable information on how not to be a monkey in the market

Book Review SBM reviews the timeless investment classic, Extraordinary Popular Delusions and the Madness of Crowds

Currency Corner New SBM contributor Samuel Rae, author of the best selling book “Diary of a Currency Trader”, explains why he is bearish on the South African rand

Alpesh Patel on the markets Alpesh looks at what men can learn from women traders

Technology Corner: The essential holiday survival kit Resident technology expert Simon Carter looks at the latest gadgets to take to the beach this summer.

Markets in focus A comprehensive markets round-up of under and out performers during the month of June

July 2014

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Titan Investment Partners

TITAN INVESTMENT PARTNERS CHALKS UP A STUNNING ONE YEAR RETURNS ANNIVERSARY

BY RICHARD JENNINGS CFA, TITAN INVESTMENT PARTNERS

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One year returns anniversary

It was in early 2012 that the seedling of an idea was germinated between a number of ex-City professionals, headed by former institutional fund manager and Chartered Financial Analyst, Richard Jennings. The idea was pretty simple: how to use the benefits of a spread betting structure but with the discipline of professional fund management in order to generate completely tax free returns for investors.

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Titan Investment Partners

Eighteen months of hard work and planning finally came to fruition when Titan Investment Partners, having received FCA approval, commenced trading in the summer of 2013. A new and unique boutique fund manager was born with an initial suite of four investment offerings run on a “fund” type basis – every investor, however, having their own account which replicates Titan’s model portfolios (and whose capital in the model funds comprises of the actual directors’ and fund managers’ own money – so ensuring true alignment with their investors). Unlike a traditional fund, however, investors can see their positions in real time (but cannot trade on the account).

“The idea was pretty simple: how to use the benefits of a spread betting structure but with the discipline of professional fund management in order to generate completely tax free returns for investors.”

The benefits of a spread betting account are multi-fold and well known: cheap borrowing capacity through the leverage facilities offered (which we’ll come back to as a double edged sword later) that investors would be hard pressed to gain access to at the same rates elsewhere (generally Libor +/- 2.5%), the ability to go long and short of a financial instrument, access to thousands of tradable products globally, speedy execution and, of course, no stamp duty or capital gains tax.

With this in mind then, why do so many investors lose all their money within 12 months (anecdotal evidence reveals this figure is as large as 90%)? It is very simple and is wrapped up in the name – spread “betting”.

The very vast majority of account holders view the account more akin to gambling than investing and so they take the “rope” of leverage (the double edged sword) and metaphorically hang themselves!

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“With this in mind then, why do so many investors lose all their money within 12 months (anecdotal evidence reveals this figure is as large as 90%)?”

Give an investor £10,000 to play with but with no leverage being applied at all and a minimum of 10 positions, and it is a very unlucky individual indeed that will lose all that money inside one year. Give him £10,000 and allow him to leverage it 10, 20 or even 30 times on just one trade, however, and the odds of total wipe out increase exponentially…

At Titan, the concept of spread betting is turned on its head. The portfolios are managed exactly as a fund manager would run an institutional fund rather than as highly levered “all or nothing” punts.

Indeed, Chief Fund Manager, Richard Jennings, was formerly responsible for managing over half a billion pounds at one of the UK’s largest local authority pension funds. It is the same principles of diversification, in-depth research and a seasoned trader’s gut instinct that are applied to the management of the Titan portfolios.

Leverage is capped on the equity component at two and a half times, and even on currencies leverage no more than six times is allowed. Contrast this with the 100+ times typical of most FX traders and the difference in approach is clear.

As the company approaches its important one year track record anniversary, so far what Titan says on their “tin” has certainly been delivered. Titan’s flagship Global Macro account is up a stunning 150.85% against a benchmark return – the MSCI World Index (in constant $s) – of 19.58% over the same period to the 13 June 2014 (from 1 July 2013).

Year to date the returns are 83.17% and 3.98% respectively against a peer group that has struggled to generate any positive returns this year.

One year returns anniversary

Considering that the average leverage that has been employed by Titan in this fund in achieving these returns is less than two times over this period, and it is illustrative of how their predominantly asset allocation and value base approach, that is borne of many years’ experience in the markets, works. Remember too that for Titan’s investors in their funds, these returns have also been delivered totally tax free. One can see that the spread betting structure is actually the means to the end to generate the returns in a legal tax free manner and is far removed from traditional spread betting.

The firm presently offers four distinct funds, all of which were seeded with the founders’ own capital – Global Macro, Natural Resources, Precious Metals and Small Cap. All four funds have comfortably outperformed their benchmarks (based on figures to 31 May 2014) while offering fees that are also lower than the typical hedge fund – 1.25% annual fee and 20% of absolute returns (a typical hedge fund is 2% annual and 20% of absolute returns). The performance fee is also subject to a high watermark ensuring that investors only pay this fee on “incremental” returns.

“Titan’s flagship Global Macro account is up a stunning 150.85% against a benchmark return – the MSCI World Index (in constant $s) – of 19.58% over the same period to the 13 June 2014 (from 1 July 2013).”

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Titan Investment Partners

So, if on a risk scale spread betting is 10 (10 being the highest risk) and typical unleveraged equity fund management offerings are a 4, Titan’s funds would sit at around a 5 or 6. With the fund manager’s own capital being invested in the funds this also ensures real alignment with investors – something that is rarely the case in the world of investment management. Richard Jennings, Chief Fund Manager is quoted as saying, “I fail to see how many hedge funds can even dare to ask investors to put up capital backing them if they themselves are unwilling to show the faith in themselves.”

“I fail to see how many hedge funds can even dare to ask investors to put up capital backing them if they are unwilling to show the faith in themselves.”

When asked where Titan’s funds would fit into a client’s portfolio, Jennings’s retort was, “Our funds are most suitable for those clients with an existing balanced portfolio who have utilised their current year tax allowances such as ISAs and pensions and whose focus is on capital growth with a moderate to high risk profile over a medium term timescale.

We can’t guarantee to deliver stellar returns month on month for clients and indeed such a short-termist approach is usually folly in the markets. But, we can guarantee to be laser focused and totally aligned with our investors on generating absolute returns in all market conditions.”

Each of the funds are benchmarked against appropriate indices to ensure a measurable test of real “alpha” being generated as opposed to pure luck. Jennings is also a strong believer in the cyclicality of the financial markets – a dynamic which is often driven by the rotational nature of the asset allocation process – something that the more nimble and fore sighted investors can take advantage of. A “closet index” investment approach is most certainly not applied by Titan. Reasoned, contrarian, value orientated and well researched asset allocation is at the heart of their model.

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“A “closet index” Investment approach is most certainly not applied by Titan.

Reasoned, contrarian, value orientated and well researched asset allocation is at the heart of their model.”

The available leverage within the funds is also applied counter-cyclically. That is, the cheaper an asset becomes, the more leverage is applied, and vice versa the dearer one is, the less leverage is used.

This type of true contrarian investing takes skill and also stringent risk control – something that the Titan mandates impose on the fund manager with regards to position sizes and other important parameters.

While the Titan Funds have a predominantly long bias, the mandates allow for the taking of short positions. These short positions are typically employed as a hedge against long portfolio exposure with a view to protecting existing gains and limiting the effects of a market correction however.

In summary then, Titan offers investors: •

Tax efficient managed account structure

•

Active fund management approach

•

Fund manager and customer outcomes that are directly aligned

•

Access to a wide range of asset classes

•

Hedge fund style management (Long/short positions and leverage availability)

•

FCA & FSCS regulatory safeguards

•

Competitive charges and performance related fee structure

One year returns anniversary

The chart below shows the performance of Titan’s Global Macro Fund versus its benchmark – the MSCI World Index (in constant $s) over the period 01/07/2013 to 30/05/2014.

GLOBAL MACRO CHART

*Titan fund performance is measured gross of performance fees

Under current UK tax legislation profits realised by individual UK taxpayers, through spread betting, are free of tax. Past performance is not necessarily a guarantee of future returns and Titan funds are higher risk than conventional unleveraged funds.

For more details visit www.titanip.co.uk

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INVESTMENT PARTNER S Specialist Tax Free Fund Managers

+158.94%

How perfo

Were those re Was your fun Are you able t Can you see y

Flagship Global Macro Returns

At T Join

WE OFFER A SEL

+20.71% MSCI Global Index Benchmark

FUND RETURN

BENCHMARK RETURN

GLOBAL MACRO

+158.94%

MSCI World Index (constant $‘s) +20.71%

NAT RESOURCES

+104.49%

FTSE 350 Mining Index +11.88%

PREC METALS

+46.84%

ARCA Gold Bugs Index (constant $‘s) +4.21%

SMALL CAP*

+9.45%

Small Cap Index +9.51%

Past performance is not necessarily a guide to the future.

Gross fund returns (before performance fee collection) from inception (01/07/2013) to 30/06/14. *Returns from 01/08/13 to 30/06/14.

GLOBAL MAC

Titan Investm utilises curren account to be

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Risk Disclaimer - Titan’s funds use a spread betting account and are leveraged products tha capital invested. Ensure that you fully understand the risks and seek independent advice if Authorised and regulated by the FCA. Registration No - 590782 14 | www.financial-spread-betting.com | July 2014

did your fund manager orm for you last year?

eturns produced in a completely tax free manner? nd manager totally aligned with you? to gain instant access to your capital? your positions in real time?

Titan the answer to each of these is a resounding YES. n us in the revolution in fund management.

LECTION OF FUND TYPES -

CRO

NATURAL RESOURCES

PRECIOUS METALS

SMALL CAP

ment Partners - professional fund management which uniquely nt UK tax legislation in allowing returns from a spread betting received completely tax free*.

more call us on 0203 021 9100 or visit www.titanip.co.uk

at involve a higher level of risk to your security and can result in losses of some or all of your necessary. *Spread betting in the UK is currently tax free but this may change in the future.

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Fund manager in focus

DAVID TEPPER OF APPALOOSA MANAGEMENT DISTRESSED COMPANY AND CONTRARIAN INVESTOR EXTRAORDINAIRE

By Richard Jennings CFA, Titan Investment Partners, & Filipe R. Costa

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David Tepper of Appaloosa Management

“However, if one can get a return of 30% by just investing in the SPY ETF, almost for free, why share 20% of the profits plus a 2% management fee with a hedge fund? That is certainly the question many investors are now asking themselves.”

Tough Times for Hedge Funds…

At a time when over 90% of hedge funds continue to underperform the S&P 500, and where recent statistics reveal that they are the most leveraged they have been since just before the global financial crisis, it continues to be really tough for a fund manager to find ways to beat the market.

While the above spells out just what a tough environment it is for many hedge funds, it also makes the remaining 10% that can consistently generate profits even more valuable. Enter one Mr David Tepper and his Appaloosa Management. With a long and exceptional 20 year returns history that has delivered his investors an average return of 30% per year, albeit with some volatility attached to it (the fundamental rules of investment regarding risk/ reward have not yet been re-written although Bernie “Madeoffwiththemoney” tried it!), Tepper has become one of the richest guys on the planet and also topped the list of the highest earners in 2013 at Institutional Investor Magazine.

In fact, it is the second straight year that Tepper snagged the top spot and the third time in just five years – something which is a clear sign that his earnings are not produced from pure luck which any fund manager can enjoy if in the sweet spot of a particular asset class. Tepper actually made a stunning $3.5bn in 2013 or, put another way, he made $400,000 per hour. Can you imagine that? Having a good night of sleep and waking up seven hours later $2.8m richer? We bet he sleeps like a baby!

The policies of “helicopter” Ben Bernanke and his successor Janet “a” Yellen continue to pump the equity bubble in the US. With all downside risks seemingly eliminated by the Federal Reserve, the “hedge” that is part of the hedge fund name has quite simply lost its meaning. Unsurprisingly, the mass of underperforming hedge fund managers at this late stage of the game have given up the ghost, succumbed to their inane human emotions and have decided to go all in and chase beta in the market.

“Tepper actually made a stunning $3.5bn in 2013 or, put another way, he made $400,000 per hour. Can you imagine that? Having a good night of sleep and waking up seven hours later $2.8m richer?”

With most Western central banks maintaining the zero interest rate policies that are largely now wholly inappropriate for most countries (the UK in particular), investing in equities appears to be the only game in town. However, if one can get a return of 30% by just investing in the SPY ETF, almost for free, why share 20% of the profits plus a 2% management fee with a hedge fund? That is certainly the question many investors are now asking themselves. Of course, what this means is that those fund managers that can generate the coveted “alpha” are finding an ever increasing bid under their names.

Tepper posted gains of around 42% in his two main funds in 2013 – Appaloosa and Palomino – as his bets on out-of-favour airlines such as American Airlines Group, Delta Air Lines and United Continental Holdings paid off. But betting on out-of-favour stocks is Tepper’s speciality, something that makes Appaloosa quite unique from its competition. Over the years Appaloosa has made substantial bets on many companies that appeared to be in serious financial trouble. We suggest you also read our piece on 52-week highs and the debunking of efficient markets’ theory in understanding the reasoning behind these returns.

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Fund manager in focus

HEDGE FUND RANKINGS TABLE

The Earlier Years…

David Tepper was born on 11th September 1957 and was raised in a modest neighbourhood in Pittsburgh by a Jewish family. He is the second of three children, with his father being an accountant and his mother an elementary school teacher. While at school, he wasn’t a naturally brilliant student but completed his BA in Economics from the University of Pittsburgh in 1978. Soon after graduating he started working for Equibank as a credit analyst in the treasury department. Unhappy with the job, he returned to university to complete an MBA (or Master of Science in Industrial Administration, as it was then known). A diligent student, this time his passage through Carnegie Mellon Business School was outstanding and the teachers remember him for his straight-A performance. Kenneth B. Dunn taught him a few courses and recalls that Tepper always posed challenging and insightful questions, “He was one student that always kept me on my toes”, he remarks.

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After completing his MBA, Tepper found himself a job at Republic Steel in Ohio where he stayed for a few years, even though the pay was not great. It was in 1984 that he moved to Keystone Mutual Funds (now part of Evergreen Funds) and then one year later proceeding to secure himself a job at the coveted Goldman Sachs. At the time, the high yield sector in the investment management industry was in its infancy and it was quite a coup for Tepper to find himself part of this area through working as a credit analyst. It was his insights from Carnegie Mellon that soon began bearing fruit and in six months he was promoted to head trader on the high yield desk, and where he continued to work for eight years.

Tepper applied the knowledge he had garnered to improve the trading models, something that gave him a huge advantage relative to his peers.

David Tepper of Appaloosa Management

While at Goldman he learned a great deal about the bankruptcy process, financial distress and other difficult situations companies can go through. More importantly, he learned how to profit out of those companies in such severe situations.

At the end of 1992 he departed Goldman, this time to start a new venture of his own. In 1993 Appaloosa Management was born, a company that has achieved extraordinary success in investing in companies in financial distress. The skills he honed and developed at Goldman have yielded him huge profits over the years and led him through multitude debt and equity positions in companies like Bank of America, Worldcom, Enron and many others. In 2009, for example, Appaloosa made a whopping $7bn by buying distressed financial stocks (including BoFA and AIG). In another example, in 2001, his company returned 61% by investing in distressed bonds.

This of course creates an excellent profit opportunity for those with the guts to go for it.

Tepper looks for value where others can’t seem to find any. Inside his portfolio of past distressed bets is Pacific Gas & Electric and Edison International, both of which he purchased in 2001. As the state of California decided to bail out both companies, the investment more than doubled in value in just a few months.

A Story of Huge Success Appaloosa was in fact founded with $57m but very quickly grew into a multi-billion dollar business due to Tepper’s 30% annualised returns. Now the company only accepts investments of $5m or more, and it certainly isn’t tailored for the most anxious and nervous investors as investments in distressed firms is a lot more volatile than an investment in the SPY ETF!

“in 2009, for example, appaloosa made a Whopping $7bn by buying distressed financial stocks (including bofa and aig). in another example, in 2001, his company returned 61% by investing in distressed bonds.”

With his specialty being “distressed” investments, Tepper always looks for what other investors would deem to be the “worst” companies – those that nobody loves and that are near default. Under certain conditions, investors overreact and push the value of these companies too low.

In 2002 Tepper bought a stake in one of the most unloved companies ever – Enron. The company ended up in bankruptcy but, in a little known fact, he actually made a fortune when it was reorganised.

Worldcom is yet another example of Tepper’s success having bought a stake in the company after it defaulted on its debt payments. He also bought Conseco’s shares when the company was near bankruptcy but, as it emerged from Chapter 11 in 2003, he made a fortune again. The success stories are many and include companies as diverse as MCI, Mirant, and Marconi. What they all have in common is the use of DEBT to obtain a position in the company.

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Fund manager in focus

More recently, Tepper took the opportunity created by the mortgage collapse in the financial sector in 2007/08. Supported by the idea of certain banks being “too big to fail�, he bought shares in BoFA at an average price of $6.73 in early 2009. As the US government intervened to avoid the worst, the shares rose to $15.80 in the fourth quarter of 2009.

At the same time, Tepper also bought AIG debt for 10 cents on the dollar, only to sell it later at 61 cents on the dollar. In that particular year, Appaloosa recorded its second best ever performance with a return near 132% and a dollar gain of nearly $4bn.

The trick, as already referenced, has been to buy into the instrument just as the asset class is near its death throes: when the upside is huge compared with the potential loss. Clearly this requires patience as nobody ever rings a bell at the top or bottom!

Other successful bets include scooping up Argentine sovereign debt in 1995, the Korean won in 1997, and the Russian government debt in 1998. The main idea is always to buy the most unloved financial instruments, those who were most likely way, way oversold. We wouldn’t be surprised if he is currently long gold mining stocks like us!

That was, of course, a wrong decision as the sector collapsed just a few months later. In 2002 he also lost 25% due to a collapse of the high yield debt market.

APALOOSA V HEDGE FUND CHART

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Of course, not all investments were great for Tepper and he has had some wrong bets. In 2000 he shorted the dotcom rally, but ended having to close his positions as his investors were unhappy with the decision, believing they were giving up upside potential.

David Tepper of Appaloosa Management

“At the same time, Tepper also bought AIG debt for 10 cents on the dollar, only to sell it later at 61 cents on the dollar. In that particular year, Appaloosa recorded its second best ever performance with a return near 132% and a dollar gain of nearly $4bn.”

The Tepper Business School

Final Comments

Apart from asset management, and in common with many of the other fund managers that we have profiled in this magazine, Tepper is also a philanthropist. In the early 2000s he made a $55m donation to the Carnegie Mellon University’s business school where he completed his MBA. Pushed by his former teacher and dean of the school at that time, following the donation the school changed its name to David A. Tepper School of Business. Last year the Tepper family donated an additional $67m to the school. Most of the philanthropy has been related to education, with Tepper founding with a friend a political action group to improve children’s’ education called “Better Education for Kids”.

Tepper has clearly built a formidable reputation in the distressed investments’ market, timing his investments to perfection in the most hated companies at that time, as investors oversold them beyond their underlying fundamental value. These are precisely the qualities that we look to apply in our fund management approach here at Titan – looking for large dislocations of value amongst asset classes and timing our entries into them with appropriate leverage in order to benefit from the double whammy of increased returns potential and reversion to mean/fair value.

If you’d like to learn more about our fund management company, then click the image below.

All Titan Funds operate within a spread betting account which means gains or losses are currently free of tax.

However, legislation can change in the future. Spread betting is a leveraged product which could result in losses of some or even all of your initial deposit. Ensure you fully understand the risks.

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Titan Investment Partners - Natural Resources Fund

1 year Return from inception to 30th June 2014 Titan Natural Resources Fund +104.49% v FTSE 350 Mining Index Benchmark +11.88% (in constant $‘s) Outperformance relative to benchmark (before performance fee) +92.61% These figures are gross returns and have not been adjusted for Titan’s performance fees.

Past performance is not necessarily a guide to the future.

• A diversified selection of natural resources related stocks and positions

• All returns completely free of CGT* • Leverage capped at 2.5 times on stock positions

• Long/short flexibility

• Directors OWN capital invested within the fund

• Minimum investment of only £10,000

• 90% of gross dividend credit on stock positions

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July 2014

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Dominic Picarda’s Technical Take

Dominic Picarda is a Chartered Market Technician and has been responsible for the co-ordination of the Investor’s Chronicle’s charting coverage for four years. He is also an Associate Editor of the FT and frequently speaks at seminars and other trading events. Dominic holds an MSc in Economic History from the LSE & Political Science.

Dominic Picarda’s Technical Take UK HOUSING STOCKS SPECIAL Britain’s housing market is booming. At the end of May, the Nationwide index of UK house prices was 11.1% higher than it was a year earlier.

The typical price of a home in London soared by 18.2% over the same period.

True, houses still cost less than they did at the peak of the last cycle in 2007. But bricks-and-mortar is nevertheless expensive by historic standards. The Halifax calculates the average UK property as costing 4.77 times average earnings, which is above the long-term average of 4.1 times.

It’s not just British houses that are expensive right now, though. The firms that build them are also sporting fancy price-tags. The accompanying chart shows the price/book ratio for UK home construction companies going back to 1980. It compares the builders’ share prices with the valuation of their net assets. Today, this ratio stands at around 1.6 times, compared to a long-run average of around 1.1 (see chart overleaf). Over a two-year time horizon, history suggests there’s a big risk that the industry will suffer negative returns.

Of course, these are not ordinary times. The state will likely do whatever it can get away with to keep the housing market puffed up, thereby shielding the banks from insolvency. Even when interest rates do go up, they are likely to do so gently at first. And, the cost of servicing a mortgage is still fairly low.

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UK housing stocks special

“the halifax calculates the average uk property as costing 4.77 times average earnings, Which is above the long-term average of 4.1 times.�

This creates a favourable backdrop for house builders, which are also in much better financial shape than they have been in the past. These factors could possibly help support the prices of house building stocks in the near-term, despite the longer-term risks.

PRICE/BOOK RATIO FOR UK HOME CONSTRUCTION COMPANIES

July 2014

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Dominic Picarda’s Technical Take

Bellway While the house building sector as a whole does not offer great value right now, Bellway is an exception. Based on its recent share price of 1,422p, the Newcastle-headquartered firm has a prospective dividend yield of 4.5% and is trading on around 1.1 times its net tangible assets. Its finances are sturdily underpinned too, as it has minimal debt. Based on its valuation and risk characteristics, the ShareMaestro model says it should currently be trading at more like 2,240p. These characteristics make it an interesting proposition to value-orientated investors.

BELLWAY CHART

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It was somewhat spooky how Bellway’s major reversal happened around 1,700p, at more or less the same level where it peaked back in 2007. Enthusiasts for patterns will doubtless interpret this as a bearish “double top” formation, especially in light of the big losses that have followed. In reality, Bellway’s share price is at something of a crossroads, having dipped below its 10-month exponential moving average, but lately showing no firm direction either way. Were its 20-day moving average to cross back above its 50-day average, I would be up for long trades, targeting 1,715p.

UK housing stocks special

MJ Gleeson It is fair to say that MJ Gleeson isn’t the most glamorous of house builders. It specialises in buying brownfield sites in socially-deprived inner city areas, for which the local councils have hitherto been unable to find buyers. The business seems to work nicely enough, though. It makes healthy profits thanks to the combination of low-cost land and materials and average selling prices of £118,000.

What is more, it was lately free of debt and sitting on some £10m of net cash. While the houses it puts up may be keenly priced, though, its shares aren’t.

According to the ShareMaestro model, the share’s intrinsic valuation is roughly 345p, compared to the current price of 378p.

Following its initial 22% sell-off from 467p, Gleeson’s share price has stabilised of late. It remains above its 10-month exponential moving average, which satisfies my basic criterion of an uptrend. Were it to break below here, though, I would become much more bearish and would start seeking short positions. Targets on the way down would include 325p, 310p and 289p. Rallies failing around the 50-day simple average would make obvious points of entry.

GLEESON CHART

July 2014

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Dominic Picarda’s Technical Take

Berkeley Group If any part of the country’s residential property market is in a bubble, it is surely London.

Inflation-adjusted prices have long since passed their previous 2007 peak, while valuations are through the roof. According to Land Registry data released in February, the price of an inner London home was 10.4 times median earnings. Even in humble Lewisham, the ratio was 8.5 times; while in posh Kensington and Chelsea it was an eye-watering 31.3 times. Based on price/book ratio, London-focused builder Berkeley is no bargain itself, its share price of 2,239p supported by net assets of only 1,064p per share.

BERKELEY CHART

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Berkeley’s share price is plainly in a strong downtrend, having peaked in late February at just over 2,800p. The selling has been powerful and determined, while the rallies have generally been brief. My approach would be to await another of these spikes higher and then try and open a short position as the price drops back through its 20-day average. I would then seek to take profits as the daily relative strength index reaches the low 30s.

Objectives include 21.10, 20.10 and 19.03.

July 2014

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www.t1ps.com

JAMES FAULKNER OF T1PS.COM TAKES A MACRO LOOK AT THE UK HOUSING MARKET In market economies, prices are fundamentally driven by the interplay of demand and supply. Yet the housing market stands apart, in that demand is acutely impacted by the availability and price of credit. This point is crucial, especially if we accept that underlying demand for housing is relatively inelastic (everyone needs somewhere to live!), as it becomes clear that monetary policy is the chief determinant of price in the housing market.

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UK Housing Market

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www.t1ps.com

“In 2012, the country managed to complete just 89,000 private homes (source: the Economist) creating a huge shortfall against the long-term average, government targets and demand requirements.”

Meanwhile, the supply-side picture is dominated by the Town and Country Planning Act, introduced by Labour in 1947. Intended to preserve the countryside from being encroached upon by the urban sprawl, the Planning Act restricted the rights of developers and gave local councils powers to determine what land should be used for. ‘Green belts’ were subsequently established on the edges of major cities, thus compounding the restrictions placed on supply. The results were stark yet predictable.

In the 1920s and 30s, private house-building in England neared 270,000 units per year. In 2012, the country managed to complete just 89,000 private homes (source: the Economist) creating a huge shortfall against the long-term average, government targets and demand requirements.

HOUSING SHORTFALL CHART Since the enactment of the Planning Act and the introduction of the green belts, UK house prices have outpaced inflation and house-building has failed to keep pace with a steadily growing population and a changing society. Despite the UK enjoying (or is that “being burdened with”?) some of the highest house prices in Europe, the UK’s housing stock is among the oldest.

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According to the charity Shelter, the proportion of UK families facing unaffordable housing costs (defined as spending more than 40% of their household income on rent, mortgage payments and other living costs) is the third highest in Europe, with only Greece and Denmark worse off in this respect.

UK Housing Market

Unsurprisingly, the UK’s housing-centric economy has had a profound effect on the attitude of policy-makers. The record low interest rates brought in by the Bank of England following the financial crisis were partially intended to ameliorate the effects of the recession on homeowners by handing them a massive reduction in mortgage payments.

The ensuing years saw living costs (excluding mortgage payments) rise much faster than wages, which left the Bank in the awkward position of making the choice between tackling inflation (through higher rates) and helping homeowners (by holding rates down). The fact that the Bank has thus far opted for the latter option speaks volumes about the real goals of today’s central bankers.

While the Bank is still mandated to target inflation of 2% (+/- 1%), the reality is that the Old Lady is now engaged in a crusade to re-inflate the economy in order to bring the nation’s finances back from the brink. The housing market is a key part of central bankers’ thinking in this regard. Despite all the talk of ‘rebalancing’, the UK economy is still essentially based on consumption, of which the housing market is a key driver. In order to get the consumer behemoth rolling again, it was essential that the housing market be re-inflated to ‘prime the pump’ of consumer spending. So-called ‘unconventional’ monetary policies began to proliferate to do just that, but it wasn’t until the advent of Mark Carney’s ‘forward guidance’ that things really started to take off in the housing market and the wider economy.

“Unlike other governmentbacked schemes, Help to Buy is widely seen to be a success, with 17,395 people having bought homes through Help to Buy since inception, according to government figures released in March.”

By reassuring borrowers that rates would stay lower for longer, Carney managed to pull the proverbial rabbit from the hat and reignite the property market, no doubt to the relief of a grateful Chancellor (and employer), George Osborne. But Osborne had a trick up his own sleeve in the form of his Help to Buy scheme, which enables aspiring homeowners to get on the property ladder with a deposit as little as 5%, either through ‘guaranteeing’ the mortgage or directly participating in the transaction through an equity loan. Although Help to Buy is a far cry from the heady days of 105% mortgages, it is certainly unprecedented in that it directly exposes taxpayers to financial loss, which is nothing if not a sobering thought given the vagaries of the UK housing market. Unlike other government-backed schemes, Help to Buy is widely seen to be a success, with 17,395 people having bought homes through Help to Buy since inception, according to government figures released in March.

So where does this leave us? Thus far, policymakers’ efforts have been focused on stimulating demand for housing through reducing the price of credit and increasing its accessibility. Meanwhile, although there is plenty of talk about increasing the supply of housing, there has been precious little action taken to make that a reality. Although there has been some half-hearted attempts to liberalise planning laws and give councils more powers to fast-track developers’ applications, this amounts to nothing more than tinkering around the edges, and stops far short of the planning revolution necessary in order to enable housing supply to keep pace with demand – a feat that would require the completion of 250,000 new homes per year, according to KPMG. As alluded to previously, it is simply not in policy-makers’ interests to tackle the supply issue right now, as they’re interested in increasing prices, pure and simple.

July 2014

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www.t1ps.com

So while it seems logical to expect prices to continue to rise, whether or not recent price rises constitute a ‘bubble’ is another question. As with so many other areas of economic activity, the UK exhibits a polarised housing market, with price rises in London and the South-East utterly eclipsing the gains to be had across the rest of the country. Prices have soared by 18% in parts of London over the past year, according to Nationwide, outstripping their peak before the credit crunch. At £362,699 (source: Nationwide), the average cost of a home in the capital is more than twice the figure for the rest of the UK. Clearly, London property is a special case given its status as a safe-deposit box for the world’s rich, but given that the first-time buyer house price to earnings ratio in London is now at a historic high of eight times (source: Nationwide), further increases of the order of magnitude seen of late could have serious social implications, and it would be a foolish government that turned the other cheek.

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“the big question will be whether or not Mark Carney is prepared to move aggressively with interest rates in order to stabilise the situation. But if Carney’s spell as the Governor of the Bank of Canada is anything to go by, I wouldn’t bet the house on it.”

UK Housing Market

Indeed, it would be churlish to suggest that policy-makers are unaware that they are playing with fire. Clearly, to their minds, they were faced with a situation that presented them with little choice, as it was essential that monetary policy accommodated the cuts being made to public spending. But with the average house price now having risen beyond its pre-crisis peak, talk is beginning to move towards taming the beast.

The Financial Conduct Authority (FCA) has launched a major crackdown on mortgage lending which will see borrowers quizzed on their spending habits; the government’s Funding for Lending scheme – which gave lenders cheap cash to kick-start the mortgage market – has been curtailed; and there is talk of Help to Buy being restricted to purchases of £300,000 or less, as opposed to the current (bonkers) £600,000 limit. Additionally, the Bank of England has been given new ‘macro-prudential’ powers that enable it to force banks to hold more capital, in a move which essentially equates to a reversion to the good old days when the Old Lady (rather than the parvenu FSA) was also responsible for banking supervision.

It remains to be seen whether or not these measures will prove sufficient to rein-in the housing market.

Should they prove insufficient, the big question will be whether or not Mark Carney is prepared to move aggressively with interest rates in order to stabilise the situation. But if Carney’s spell as the Governor of the Bank of Canada is anything to go by, I wouldn’t bet the house on it.

In Canada, Carney was credited with presiding over the best performance of any G7 economy during the financial crisis, having taken an aggressive monetary stance earlier than most of his counterparts and extending an explicit commitment to keep interest rates low, while also providing significant liquidity to the banking system. The result was a much shorter and shallower recession than elsewhere, but the flipside is that Canada’s banks and consumers never really underwent the de-leveraging that took place elsewhere either. With its housing market beginning to collapse, Canada’s chickens are only just coming home to roost, but Carney has long since fled the hen house.

July 2014

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July 2014

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Zak Mir Interviews

ZAK MIR INTERVIEWS

DAVID LENIGAS

Zak talks to man of the moment David Lenigas on cricket, oil, rare earth minerals and the markets.

Zak: Welcome David Lenigas. We’re going to talk a little bit about what he does after the important stuff which is … cricket. Are you a fan of cricket David? Do you follow cricket?

Zak: Are there any sectors you particularly like or is it purely a matter of the opportunity that you see before you? Obviously the airline sector is not known for being a profitable one.

David: I follow cricket and very rarely I play it these days. Good to see Australia’s now number one again.

David: You know, the airline business we started was a game changer for Africa when I was chairman of Lonrho and Ed Winter and the guys (at Fastjet) have done an absolutely fabulous job. I think they were probably the most on-time airline in the world. The last time I looked at the numbers and spoke to Ed, it was 99.5% on time departure.

Zak: Do you have any sympathy for the England team?

David: Zero.

Zak: That’s the answer I was probably expecting.

Right, moving on to slightly less important matters. You’re on the board of 15 companies. You are a serial entrepreneur. Just on a practical basis, how do you keep track of what’s going on?

David: Well, my main role in life is Chairman, so raising money and setting strategy. At each one of the companies there is some good management underneath me. I mean, I really leave the running of the business to the CEOs. I pick up a lot of quite defunct companies, restructure them, raise the funds, put in the right management, put in the right deals. Some deals work, some deals don’t and if the ones that don’t work, don’t work, you get another deal that does. So, it’s all about management underneath you.

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Zak: Even better than Ryanair? Unbelievable.

David: I know. Ed’s doing a fantastic job and last time I spoke to him a couple of weeks ago they were looking at significantly expanding the fleet.

The big game changer for them is when they can go from Dar Es Salaam to Nairobi and then I think it will completely transform Africa.

Well look, the things I like getting involved in are things that I think there is money to build a business around. It’s difficult to go and create a company and a concept, to go and buy assets if there isn’t enough money in the street to provide the money to go and buy the assets. Right now, I see oil and gas as interesting.

David Lenigas

The fracking scenario I think will get a lot more interesting in the UK in the next few years as government legislation changes. I see technology as interesting, but from my experience I usually like playing games with businesses that I understand.

Every time I move away from the areas that I understand, it usually doesn’t end up pretty.

Zak: And is that the same for private investors? Is that something they should focus on as well?

Zak: Right, your eponymous company, Leni Gas & Oil. The shares have risen fourfold in the last six weeks. A charting success for me perhaps?

David: I’ve been watching.

Zak: And a financial success for people involved.

I’ve actually read that one or two tipsters suggest that people should take profits and that things are getting overcooked. How good is that advice when you are in a situation that is transformational? A big event has happened that could really change the face of the company. Is it a really good idea to take money off the table and keep fiddling with your position?

David: I always say, in an open forum or a closed forum, it’s not my place in life to advise people to buy or sell.

Zak: No, but you yourself would be in there for the long haul. That’s what I’m saying.

David: I’m not here to give investment advice. Stick with what you know best, do your research and my only real advice to private investors is don’t gamble with money you don’t have.

David: I’ve been in Leni Gas & Oil since it started.

I’ve bought shares on the way up and I’ve disclosed them. LGO was a concept to build a medium sized company that would eventually kick through a thousand barrels a day and then to two thousand barrels a day.

July 2014

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Zak Mir Interviews

The Trinidad assets will do that for LGO. Not might, will. It’s a matter of time. We’ve announced that we are doubling the number of rigs at the Goudron field. Hopefully, we’ll have that sorted in the next couple of weeks. Neil Ritson, the CEO, is in the country trying to resolve that at the moment, which is good for the field.

There is a lot of oil in this field. What is a lot of oil worth? I can point to a number of companies, but I’m not going to on this forum, that have no production and have “a lot of oil” that are valued in the hundreds of millions.

Goudron is a big underdeveloped field that was drilled with the wrong technology sixty to seventy years ago. Technology has moved on and what we’re finding in this latest set of drilling, the first holes in Goudron for thirty-five years, is that there is a lot more oil down there than even we thought when we look at the logs compared to what we have in the resource base. Neil Ritson indicated that with what we’re finding with new techniques and technology, we’re going to look at significantly increasing the store, which obviously flows through to reserves.

Zak: Moving along from Leni, Rare Earth Minerals.

David: What’s your charting show, Zak? Zak: I don’t know if I could have done a 0.45p on the last round as you did, but it was pretty close to the 200 day moving average at that time so it was a good opportunity. I’m looking for 1.5 pence myself so I think we’re about half a penny away from that.

On the fundamentals side, what I find interesting with this company is that you’ve got properties in Mexico, Greenland and in Australia and, from my research which is maybe not exhaustive, China seems to have the major resources in that area.

David: And they still do. They control 95% of the rare earth market.

Zak: Right, so how much of a contribution can Rare Earth Minerals make?

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David: It’s a long way down the track. If you look at what Rare Earth Minerals is its really two plays. It’s the lithium play in Mexico, which is without doubt the largest asset within the group, and then you have the rare earth site at Yangibana, Australia, which is being paid for by Hastings so it doesn’t require any funding from us and they are drilling there at the moment. I would expect the drilling to be completed within the next week or two.

Yangibana is a known rare earth occurrence.

Australia has good mining governance and Greenland has always been an area of interest.

We’ve got a huge amount of ground around that Kvanefjeld uranium rare earth deposit and you know the exploration team actually sit on the ground on the 17th of this month so that’s not that far away.

“The Kvanefjeld deposit is the largest rare earth deposit in the worlD.” The Kvanefjeld deposit is the largest rare earth deposit in the world. The only issue they’ve got right now is how the Greenland government handles the concept of uranium and thorium within that massive sort of billion tonne resource. The interesting thing about what we’re looking at in Greenland, particularly where we are going to start our exploration efforts, is indications that we have quite significant rare earths without the uranium and without the thorium and that is going to be our first exploration priority target. So that’s the Rare Earth side which I see as exciting. The lithium side is going to blow the lights out big.

Zak: Right.

David: I mean I’ve said publicly I’ve been a mining engineer now for too many years. This to me is a world class deposit. It’s a simple quarry. I’ve been involved in complicated mines, complicated metallurgy. Copper, gold, silver, nickel, coal, you know? This is a simple quarry. The metallurgy’s solved.

David Lenigas

The world is going to need a lot more lithium and it’s going to need it quickly, particularly with the initiatives from Tesla and Elon Musk in building the Giga Factory and there may in fact be more than one Giga Factory. That’s what the discussions are globally on what his ambitions are there.

I mean, that factory is going to produce more lithium batteries than the whole of the world produced last year. Just one plant and you know you are looking at sources principally coming from the sellers in South America. The average capital cost for a medium sized lithium mine is the order of $500 to $800 million and two to three years before first production.

Mexico is a simple quarry with quite a simple plant and the key objective there was to keep drilling the project to see how big it is. At the moment Iithium is $7,000 a tonne for battery grade material so we have $26 billion of in ground identified lithium to good indicated category.

The real scope for Rare Earth Minerals and our partners is how big is Mexico and the Sonora project. At the moment we’ve only drilled out 10+ kilometres of what could effectively be a 100 kilometre strike and we don’t even know if we’re drilling the highest grade areas. This is a big piece of ground. A quarter of a million acres. We have basically tied up the entire Sonora province. A: we want all of it but it takes time and money to drill it and B: we wanted to keep competitors out.

Zak: So you’re still feeling your way in that situation?

David: Yeah. But I mean, what have we got now?

3.3 million tonnes of LCE (Lithium Carbonate Equivalent) in the world.

We’ve got 10 to 20 years’ worth of global supply already drilled out and what I like about this project is that its gone from nowhere to being, I think, within the top 10 lithium deposits in the world today in a year and a bit.

Zak: Well obviously we could go through your whole portfolio but it would take a couple of days, really what I wanted to know is are there any companies in your portfolio that you feel the market is under-appreciating or which are undervalued at the moment?

David: Every CEO thinks their stock is undervalued.

It’s a matter of how you get out there and tell your story. We’re seeing a good appreciation in Leni Gas & Oil to get closer to what we as a board feel is the true value of the asset.

Rare Earth Minerals, I think there are some very interesting things over the course of the next month or two. We’ve already disclosed what’s going to happen. The one that I think will get more people interested in, if that is the way to answer your question, is the consortium of companies that will be drilling the Horse Hill well.

The well is due to spud in July and up until this morning there is no change in spud date. Horse Hill is an eight and a half thousand foot well, three kilometres from Gatwick North Terminal. We know there are hydrocarbons there because they found them when they drilled two wells in the 1960s, so the chances of finding oil are very high.

Zak: This is a fantastic opportunity, in the sense that these are legacy mines, I suppose. I don’t know how you describe them in technical terms, but these previously worked situations seem to be a rich vein in terms of exploration.

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Zak Mir Interviews

“fund managers do not play shares these days, it’s a different World compared to 2008. this market is driven by retail interest and sentiment.”

David: When I was a young man, there was an old gentleman called Frank and he actually had a better batting average than Sir Donald Bradman. He actually had a batting average for his career of 102.

And old Frank told me, he said, “Dave, the best place to find gold is underneath where the old timers found it” and that has been a lot of what I look at.

If we look at Horse Hill, people have known about it for a long time. The majors have had it, the majors have dropped it. There was a whole area of time in this country when it was difficult to get things permitted. It’s not fracking, it’s conventional and that is the opportunity.

So between UK Oil & Gas, Doriemus (which I’m not on the board of, but Don Strang is), Solo Oil and Stella Resources, they are in for the second week in July, it’s a month away. Now I think that when that site activity starts, that’s when I think people will understand the significance of what we’re trying to achieve here.

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And other things within the portfolio. Look, I think the Inspirit Energy boilers are a smashing technology for Britain. You know, we’ve got some major utilities interested in this technology and the other reason I particularly like it, and with what John Gunn and our team are doing, is that they have created the most efficient boiler in the world, which is a green boiler and each one of these in fact turns into a mini power station.

But there is still some work to be done. The plan is to have eight to ten pre-production commercial units sometime in October. Put them in, get them verified, validated and certified for the EU marketplace, and then see where the adoption lies.

David Lenigas

But look, each one of these companies has a cycle and it depends how long you keep retail interest on it. Fund managers do not play shares these days, it’s a different world compared to 2008. This market is driven by retail interest and sentiment.

All the fund managers who used to play 20 to 50 million pound market cap shares have gone and I don’t see many coming back in to the market yet.

They are too busy playing the plus billion dollar Vodafones or Googles or whatever, so the market is driven by retail. So it’s a matter of when they become interested.

Zak: But in a way, they’ve got nowhere else to go. I mean, there are not many entrepreneurs like yourself and also, I suppose this reminds me more of the 1980s. I think that was the last time when there was that sort of Big Bang type of situation in the UK anyway when there was a sort of OTC market going on. It reminds me of when I was young, 20 or 30 years ago when I first got into the market, that there are actually situations where private investors can be in a sort of level playing field situation in terms of research and knowledge.

David: Let me tell you one thing I’ve actually found out and I’ve been in the London market now for ten years as well as a whole lot of other global markets.

Retail does even more research on the things than even I do. I mean, just reading some of the research that some of these shareholders in Leni Gas & Oil and Rare Earth Minerals come up with is astounding and I think also the market has changed from a private investor’s perspective with the new tax legislation, the new ISA rules, the tax free allowances that are now being given by the Government and the massive surges in spread betting and CFDs. Zak: You don’t think this is a bubbly thing? It’s actually the start of a new era in terms of, let’s say, empowerment for the smaller investors.

David: Yeah, I think it is a new era in small to medium cap market movements in this area, particularly in this sort of open market here in the UK. Institutions aren’t playing. I went to New York the other week and saw some of my institutional friends from when I was running Lonrho who raised a lot of money for me to build Lonrho from nothing into 23 countries again and of the 50 guys in New York, there’s probably only five that would play in the smaller end of the market now.

Zak: But do you think the institutional liquidity might come in to this area at some point?

Which would be great obviously for the people involved at the moment.

David: It always does.

Zak: They’ll be late to the party.

David: It always does. It’s a bit like, you know, the old saying that when the Swiss start buying you know that’s the top of the bill. So yeah, I think retail will drive businesses to the point that they become very interesting. They will also provide funding for a lot of the things that CEOs like myself and other guys in this smaller to medium end market do and then it’s a consolidation in the marketplace and M&A.

Zak: Your funding is only from private individuals? You don’t go to Royal Bank of Scotland to get funding?

David: It’s a bit like going to a high street bank and going, “Please lend me some money, because I want to go build a business”. The answer is no.

Those guys don’t play in the small end anymore.

There are certain requirements for fund managers.

One is they can’t take too much of your share. Most like being below 3%. They usually want to trade things that have volume and liquidity because some fund managers have liquidity requirements.

Zak: Finally, you’re obviously a big player on the AIM market and I’ve described you as a one person stock market anyway, which I think you are.

There should be a Lenigas index or something like that of your portfolio. But I mean, the AIM itself is almost sort of like the Wild West, it’s a speculative Wild West.

July 2014

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Zak Mir Interviews

David: It’s changed, Zak. I remember when I first came to London, I did Cambrian Mining, Western Canadian Coal, BDI Mining, River Diamonds. I mean, when I did the Asia Energy IPO, we raised 11 million pounds. That was the second largest raising on AIM’s history in 2003.

You know you have companies like ASOS on it, there are a lot of billion pound companies on AIM. The regulation is good and, let me tell you, I’ve done both sides of the fence. I’ve done main board with Lonrho, I’ve done AIM, and I would hazard to say that, from a directors’ responsibility and reporting perspective, AIM is far more onerous on directors than being a director of a main board company.

So I think the original concept of the old Vancouver Stock Exchange and here’s the AIM market, has changed. You know, New York fund managers never used to invest in AIM. New York fund managers now invest in AIM. They have government issues and rules to look at as well, so I think the whole AIM debate about this is the Wild West is wrong.

Zak: So whose agenda is this negativity? If it’s doing such a good job and its working really well, which I suppose I think from a speculator’s point of view it seems to be. You know, coming up with decent opportunities and ideas and companies.

Who seems to be against it?

Zak: People don’t understand it.

David: People don’t understand it. The market making system is hard for people to understand.

For ten years, I’ve been trying to understand it and failed, but it’s a necessary part of this market.

People have tried to change the market maker system forever and I give up. It works. So, it’s a market that’s getting more mature and I think AIM has a big place in this market for incubating companies, and ideas, and projects and I’m not saying it’s easy to raise money on AIM, but the rules are a little more relaxed on how much money you can raise and when, provided you work within the rules.

If you are a main board company, you are very restricted on how you can raise money. The main board, in my experience, is for companies that are already grown and aren’t really looking at growing and acquiring and needing capital to grow and it’s about “I’m comparing myself to the peer sector” and I want to outperform the peer group by 7% or something. The AIM market is about incubator growth and the rules are really tough.

Zak: And you think it works well?

David: I think it works very well.

Zak: David Lenigas, hope to see you again and we can go through a few of your other companies as well.

David: My pleasure. Thank you very much.

David: I don’t know. I think I it’s a legacy issue.

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Using the 52 week high indicator to generate excess returns

USING THE 52 WEEK HIGH INDICATOR TO GENERATE EXCESS RETURNS

By Richard Jennings of Titan Investment Partners & Filipe R. Costa

July 2014

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Using the 52 week high indicator to generate excess returns

Investors and fund managers alike are always looking for new ways to gain any advantage possible relative to the wider market, the veritable “holy grail”, if you will, in the seemingly endless pursuit of the production of what is called “alpha” – excess returns attributable to investing skill.

Some dig very deep inside company financial statements. Others look into all kinds of technical indicators in an attempt to identify a discernible and tradable pattern. A few break the insider trading rules. And there are even those who trade purely on their emotions and impulses. One way or another, if the nonsense that is taught in traditional investment qualifications is correct, namely that markets are “efficient” (they are not), then they are doomed to fail in this quest.

Eugene Fama

Recent Nobel Prize winner, Eugene Fama, argues that it is better to give up on trying to beat the market, as it is unbeatable by its very nature! If a profit opportunity arises out of some identifiable chartable pattern, Fama asserts that all investors will then proceed to adopt the same strategy in relatively little time and the profit opportunity ceases to exist. Depressing stuff for us active investors, eh? Furthermore, his contention is that looking at past data – either prices or news – doesn’t give you an advantage whatsoever, and the best you can do is really achieve the same returns as the market as a whole. By extension, and as evidenced by the sheer uselessness of analysts en bloc (as this publication has demonstrated many times over the last two years), even attempting to look into the future prospects of a company will not leave you any the wiser. Competition between fund managers assures that all information, be it past or prospective, is already priced into shares.

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As regular readers know, we beg to differ wholeheartedly on these assertions and believe that, in fact, asset classes as a whole are largely mispriced most of the time. Markets are not “efficient” for many reasons: the principal one being tied to basic human emotions, that of greed and fear and where we are on that pendulum at a point in time. Think about it, if our assertion was not correct, then stock prices overall (at an aggregate index level) would not gyrate around wildly and would largely follow a high correlation pattern with a country’s GDP growth and profit share over time. Such as in the example of a “Bushism” – the price you observe for a share is its rational price… Until it isn’t!!

“As regular readers know, we beg to differ wholeheartedly on these assertions and believe that, in fact, asset classes as a whole are largely mispriced most of the time.”

We also have empirical evidence that under certain conditions there are really sudden and wide-ranging changes – exogenous shocks. Just look at some recent past bubbles. Is it possible to argue that house prices were rational until 2007 and indeed that London house prices are today? The inflated prices until 2007 were partly irrational and ditto with London housing stock now.

So, if prices always have an element of irrationality embedded within them, then this is good news for active investors: it means that we generate “alpha” precisely by going against the masses. Looking at past prices in a certain way is sometimes actually enough to make a profit, as has indeed been shown by many academics.

Using the 52 week high indicator to generate excess returns

In fact, we can point to Jegadeesh and Titman who, in 1993, demonstrated that buying the shares of companies that have performed well during the recent past does actually result in good future performance over a short term timescale but then, oddly, bad performance as time goes on. So, in effect, it was a shoring up of confidence in both momentum and contrarian strategies!

So, bearing all the above in mind and the title of this piece, how can we potentially profit from assessing a stock’s position relative to its 52-week high or low?

In a paper published in 2012, Li and Yu, two researchers from the University of Minnesota, claimed that you don’t need past prices to make excess profits. All you need, as the argument goes, is the current price, the 52-week high and the historical high; that’s enough to beat the market!

Their intuition is as follows: investors look at the proximity of the current price of a share to its 52-week high to gather the potential for share appreciation. When the price is near to the 52-week high, investors are reluctant to react to positive news and big higher prices, so they in fact underreact to news. This means that those stocks that are near their 52-week highs are in fact likely undervalued relative to their growth prospects. But, as the information continues to flow in the same direction (positive news), the price then finally adjusts higher.

Seeking for excess returns has always been the main goal of investors and at the centre of academic research on what now has the official title of “behavioural finance”. Some important work has indeed identified a myriad of anomalies in the stock market: the January effect, the Holiday effect, the Weekend effect, the Halloween effect, and many others. Profit opportunities repeat themselves over time. Every year, every period, the same opportunities are still available. Why? Well, investors are not rational and they do take biased decisions. For example, in the small cap arena where smaller retail investors are more active than institutions, the reason stock prices generally go much lower and higher than you would expect is, in the former case, due to clients’ aversion to taking a loss, and in the latter due to plain greed and the fear of missing out. Do you really believe that before taking an investment decision, an investor always looks into every piece of information available about a company? Do you really believe that a human being is unbiased in their decisions? Many investment decisions are taken without all information being evaluated, in fact, more often than you would believe, without any research whatsoever. Investors look at anchors and guide their investments based on them.

“In a paper published in 2012, Li and Yu, two researchers from the University of Minnesota, claimed that you don’t need past prices to make excess profits. All you need, as the argument goes, is the current price, the 52-week high and the historical high; that’s enough to beat the market!”

So, the proximity to this 52-week high is a predictor of future positive returns. At the same time, they argue that the opposite effect in fact occurs regarding the historical high (that is a stock price could have a price of say 200p that is a 52-week high, but the historical high may be 500p). When the price is near the historical high, the company has most likely experienced a period of positive news flow and traders tend to overreact.

Consequently the shares may be overvalued. So, on what appears a little confusing but, if you think about it, a logical assumption, the proximity to historical high predicts below-market future returns, as opposed to the proximity to the 52-week high, which predicts above-market future returns.

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Using the 52 week high indicator to generate excess returns

So, through applying this information we can obtain a sample list of share data with current price, 52-week high, and the historical high. From this data we can compute the proximity to the 52-week high as (current price)/(52-week high) and the proximity to the historical high as (current price)/ (historical high). Then we can rank shares by their proximity to the 52-week high (highest to lowest).

The top of the list shows candidates for undervalued companies. Remember to adjust for proximity to the historical high, as these companies with the highest values are more likely to be overvalued.

In looking at a list of FTSE350 shares (early June) as an example, and applying the above criteria, we can see what pops up in the table below. We selected the companies with a ratio at or above 0.95 reference nearness to the 52-week high. Then we ranked this list for the proximity to historical high (highest to lowest). The top list shows us candidates for potential short selling, while the bottom shows us candidates for long positions.

52 WEEK HISTORICAL RETURNS TABLE So, in following this strategy, from this table you could select First Group, Hays, Intu Properties, Segro and BTG to build a long component portfolio, and if you want a self-financed one and an attempt to introduce some market neutrality, then you could sell the other five in the short-selling part.

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You should not take this piece as an advocation to trade in any of the instruments mentioned and should always take professional advice in relation to your own personal circumstances.

All Titan Funds operate within a spread betting account which means gains or losses are currently free of tax. However, legislation can change in the future. Spread betting is a leveraged product which could result in losses of some or even all of your initial deposit. Ensure you fully understand the risks.

Titan Investment Partners - Global Macro Fund

1 year Return from inception to 30th June 2014 Titan Global Macro Fund +158.94% v MSCI World Index Benchmark +20.71% (in constant $‘s) Outperformance relative to benchmark (before performance fee) +138.23% These figures are gross returns and have not been adjusted for Titan’s performance fees.

Past performance is not necessarily a guide to the future.

• A diversified portfolio of Global Macro themes

• Leverage capped at 2.5 times on stock positions

• Long/short flexibility

• Directors OWN capital invested within the fund

• Minimum investment of only £10,000

• 90% of gross dividend credit on

• All returns completely free of CGT*

stock positions

CLICK HERE FOR OUR LATEST FUND MANAGER’S PDF 0203 021 9100 www.titanip.co.uk Risk Disclaimer Titan’s spread betting funds are leveraged products that involve a higher level of risk to your security and can result in losses of some or all of the capital invested. Ensure you fully understand the risks and seek independent advice if necessary. *Spread betting in the UK is currently tax free but this may change in the future. Authorised and regulated by the FCA. Registration No - 590782 July 2014

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A day in the life of a FTSE binaries trader

BINARY CORNER

A DAY IN THE LIFE OF A FTSE BINARIES TRADER

BY JOHN PIPER

It’s a tough life for us traders. Getting up early to review the charts before the FTSE opens can be simply too much bother for some but I consider it essential. As I do this I make notes.

For example:

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A day in the life of a FTSE binaries trader

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A day in the life of a FTSE binaries trader

Right, it is now time for breakfast on the beach.

Damn hot it is too – I said it was tough! I have around six hours until the FTSE opens and the fun begins, I have to try not to be too miserable in this island paradise up to that point.

As this is titled “a day in the life” I suppose I ought to mention the sunbathing, wave jumping, and lunch...

Actually I will mention lunch. I ordered king prawns and they were around 12” long! Pretty impressive prawns. And freshly barbequed. It doesn’t hurt that they cost around £6 – I would have paid ten times that in the UK, although no restaurant in the UK can compete with a Thai beach for ambience.

Anyway, at 2:50pm (7:50am in the frozen wastes of the UK) I was back “on station” at my PC expecting an early rally and looking to sell, as I thought it was time for a pullback.

Market opens The early action supported my view, with a failed break above 6,300 (meaning the FTSE poked its head above 6,300 and promptly fell back) and at this point I bought the following bets:

FTSE 100 INDEX

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FTSE to end down >50 points – bought at 11.4 FTSE cash low to be <-100 – bought at 8.9 I expected that both of these bets would prosper on the back of a decent fall, even if the FTSE does not go all the way.

I did consider the bet FTSE to end down but it was priced at around 40 and this did not offer such good odds. To put this in trading terms the risk/reward was not to my liking.

Here is a chart of the action, including the sell signals on the day itself. I have also marked the possible five-waves up on this chart. The five-wave pattern is a technique from Elliott Wave Theory.

“all through my trading career i have alWays tended to take profits too early – not much too early but still leaving plenty on the table.”

A day in the life of a FTSE binaries trader

A quick note on binary betting For those of you unfamiliar with the delights of binary trading I ought to make a number of important points.

Unlike with spread betting I am not worried if I do not catch the high – I cannot get stopped out of most binary bets, even if I wanted to. The fact a market may go 30 or 40 points against me is not of major concern as long as it goes the right way eventually.

If I buy a bet at 40 my maximum profit is 60 (100 – 40) as a binary bet can only move between zero and 100. That is a reward of only 1.5 times my risk (60 divided by 40 = 1.5 = 150%). But consider this ratio on my other two bets. Buying at 11.4 gives me a potential reward of 88.6 (100 – 11.4) and a ratio of almost 8:1. Buying at 8.9 is even better giving a potential reward of 91.1 (100 – 8.9) and a ratio in excess of 10:1.

Consider this in the context of risking a total of £100 on each bet: Buying at 11.4 allows £9 per point (11.4 x £9 = £102.60).

My maximum potential reward is then £797.40 (88.6 x £9= £797.40). In percentage terms that is a return of 777%!

Buying at 8.9 allows £11 per point (8.9 x £11 = £97.90).

My maximum potential reward is then £1002.10 (91.1 x £11= £1002.10). In percentage terms that is a return of 1,023%!

You will notice that risk/reward is significantly better if we risk less in the first place and the lesson is that it pays to get in cheap (or sell high when we sell to open).

However, the failed break above 6,300 remained a solid sell signal and this was still in place so I kept the faith.

For those of you unfamiliar with the delights of While this was a happening I was fairly busy working on a new DVD and preparing some trading examples for that series and a major seminar I was giving shortly. I find it so much easier to do this creative work when I am away from my UK office free of many distractions. I also think my frequent visits to the beach help - there is nothing quite as inspirational as waves gently lapping a tropical shore.

The sunset was stunning as well!

FTSE starts to move It was after midday (7pm in Phuket) that the FTSE started to move. By this point I was fully positioned and preferred to leave my trades to their own devices at this point. My girlfriend was after a book of Thai fauna and flora and I had been dispatched to find it along with some solid gold earrings, hoping those trades would help fund to them!

All through my trading career I have always tended to take profits too early – not much too early but still leaving plenty on the table. I know many traders have this problem and many never get beyond the phase where their trading results are merely a long stream of small wins and small losses.

Partly, this is a result of an age-old problem facing traders who choose to spread bet or trade futures – the problem of mastering two very different skills.

In fact I would say they were opposing skills: - cutting losses is active and disciplined.

Back to the market…

- running profits is relaxed and passive.

Around 9am the FTSE rallied again to a new high at 6,307 and then fell back again. But the fall was not rapid and the FTSE then saw a brief move back above 6,300 – this was not too encouraging for the bear case!

Yet traders must learn to do them both concurrently.

Not surprisingly, many fail.

But this brief move to new highs is the sort of action that can stop out traders who are using spread bets to place trades and is one very solid reason why I much prefer binary bets.

For the next few hours not a great deal happened as the FTSE bounced between 6,310 and 6,270 – in fact it looked as if we were seeing some sort of correction before we went higher.

This is one of the principle reasons I now use binary bets fairly exclusively. You do not need to cut losses, it is all in the price if you trade carefully, and you are free to concentrate on running those all-important profits.

This is particularly true if you trade at low prices. If you buy a binary at 10 the downside risk is strictly limited and the spread takes care of a good chunk of your risk straight off. But you have 90 points to run all the way to 100.

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A day in the life of a FTSE binaries trader

Anyone who has been trading for a while will know that it is not the entry that makes a trader – it is the exit. It is all too easy to make a fuss about entry with a zillion books, software programs, and gurus galore telling us all about entry. Entry is important but exit is a lot more so.

Yes, in terms of profits but no, in every other sense.

It is much better to develop winning habits, not losing ones.

Back to the action…

Below is a chart of the whole day’s price movements.

Consider three traders...

The key features are: They all enter at the same point but the first one gets out because of a small pullback which gives him a small loss. The second grabs an early (and small) profit. But the third hangs in there and bags a big profit.

You won’t need me to tell you which one is the successful trader of the three, but they all entered at the same price.

It would have made no difference if the third trader had got in at a worse price - he would still wipe the floor with the others as far as the bottom line is concerned.

The worrying aspect is that traders tend to repeat these behavioural patterns over and over again. Yet is the difference that large?

FTSE 100 INDEX, 26TH NOV

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1. The early failed break above 6,300. This sell signal was enhanced as it came in early in the session, early in the week and the action was quite sharp. I sold the market at this point by buying down binaries.

2. Despite this, the FTSE decided to probe back above 6,300 and, no doubt, took out a few stops in the process. The market’s job is to maximise trade and when traders place stops they are showing their willingness, although not their desire, to trade. The market is happy to gobble up the business regardless.

3. Up to around midday the FTSE seemed to be stuck in a range between 6,270 and 6,300. At that point it could have gone either way but I stuck with my positions.

A day in the life of a FTSE binaries trader

4. The FTSE then fell away and you can see that a five-wave form developed.

The a-b-c rally I have labelled as â&#x20AC;&#x153;4â&#x20AC;? is of note as that signalled the fifth wave decline which was essential for the profitability of my trades. After that it was simply a matter of holding on for the ride.

Charts of the bets

Although I passed (as I did not want to pay 40 for this bet) it was a clear winner and expired at 100 at the close. I know many traders are happier taking more certain profits and in this context the price of a binary bet does reflect the probability that it will be a winner. A bet at 40 can be said to have a 40% chance of success. The art of binary betting is to pick bets that cost less but still go all the way.

I am now going to look at the charts of each bet in turn.

FTSE to end down I will start with the bet I passed on: FTSE to end down. Below is the five minute chart:

FTSE TO END DOWN

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A day in the life of a FTSE binaries trader

FTSE to end down >50 I paid 11.4 for the bet FTSE to end down >50 and I would say the odds of a decline of 50+ points were much higher than 11.4%.

That is where my indicators come in. If they have any value they allow me to buy a bet at 11.4 where I think the odds are nearer 50/50.

The chart below shows the five minute action on this bet: Of the three bets I am looking at this was the pick of the bunch. Why? Because it went all the way to 100 and it was cheap to buy! It cost 11.4 and went up to 100 offering a return of 777% on the amount at risk.

FTSE TO END DOWN >50

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In fact, I generally prefer bets like FTSE cash low to be <-100 because as soon as the FTSE hits that level (i.e. sees a low more than 100 points below the prior close) the bet expires at 100 and the profit is secured.

A bet FTSE to finishâ&#x20AC;Ś is always less certain as whatever the FTSE might do during the day, its actual close is always uncertain. For example the FTSE may go 100 points down and then close 10 points up.

For this reason I am more prone to take profits on these bets at some point during the day â&#x20AC;&#x201C; especially above 80 (on a bought bet) I see no point in risking 60 odd points of profit just to try and get 20 more and this is especially the case as the close looms.

A day in the life of a FTSE binaries trader

FTSE cash low to be <-100 The chart below is of our final bet FTSE cash low to be <-100 and this bet gave plenty of profit potential but did not go all the way.

I bought in at 8.9 and you can see from the chart that the bet went up into the 30s just after 4pm. That is a potential return of around 200% on the risk incurred.

All in all a good dayâ&#x20AC;&#x2122;s trading on the FTSE which illustrates quite well the way in which I approach markets. I did not get out at the best levels on either bet but the end result covered the cost of those gold earrings and I am most certainly not complaining.

FTSE CASH LOW TO BE <-100

If you want to see the video clips I recorded as I did these trades please visit my website at www.johnpiper.info Written by JOHN PIPER, professional trader and best selling author of THE WAY TO TRADE, BINARY TRADING and BINARY BETTING Email: jptt@aweber.com Web: www.johnpiper.info

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www.t1ps.com

THREE SMALL CAP STOCKS SET TO BENEFIT FROM THE HOUSING BOOM

BY JAMES FAULKNER OF T1PS.COM

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Three small cap stocks

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www.t1ps.com

Housing-related stocks have taken a knock of late as investors began to worry about potential interest rate rises and policymaker intervention intended to cool the housing market. For those who believe this is simply a pause for breath before the next leg-up, we have put together a selection of housing-related smaller companies where we believe valuations to be attractive and prospects to be good.

The mainstay of British middle-class kitchens everywhere, the Aga (AGA) cooker commands significant brand loyalty and prestige. However, the firm has plans to grow the brand overseas to push international sales above 50% of the group total.

“it is also interesting to note that although uk household expenditure on cookers rose

by Just 1% in 2013, aga revenues rose by 2.4% in the year as a Whole, suggesting the firm is groWing market share.”

The key challenge for Aga in recent years was the collapse of the UK housing market in 2007-09. In 2011 the firm sold 11,000 ovens, almost half the 19,600 it sold in 2007 before the crisis hit. This is understandable given that people generally spend as much money on their houses in the six months after they move as they do in the next five years.

However, the incipient recovery in the housing market has seen Aga bounce back, and the shares look like they could have further to go.

Full year results for 2013 saw pre-tax profits come in at £6.8m (before non-recurring costs), growth of 7% year-on-year, with sales ahead by 2.4% but gaining momentum in H2 at +4.4%. Operating profit was up 26.2% at £8.2m with margins recovering slightly, and despite some reinvestment in sales and marketing resources, cost growth was contained to c.1.5% on the back of several savings initiatives. Despite an inauspicious beginning to the year, with Aga volumes down 2% in H1, volumes ended the year up by an impressive 10%, with momentum said to have continued into FY14. This was confirmed in May when management confirmed that revenues in the early part of 2014 rose faster than in the second half of last year and that momentum was continuing in the order intake. It is also interesting to note that although UK household expenditure on cookers rose by just 1% in 2013, Aga revenues rose by 2.4% in the year as a whole, suggesting the firm is growing market share.

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I should say that Aga comes laden with a rather large pension scheme, with assets worth £828.9m as at the end of 2013 and outgoings set to peak after 2020 at just over £50m. This has been a source of some concern for investors in the past, with the 2012 deficit of £165m being in the order of several multiples of the then prevailing market capitalisation of the company, although the deficit has since declined to ‘just’ £35.8m as at 31st December 2013. In November 2012 the company reached an agreement with the pension trustees to hand over £16m, leaving it to face no further payments until 2015. Pensions accounting is complex, but it is worth noting that the scheme had a surplus as late as 2007. The problem here is that with interest rates at record lows, the appraisal of the scheme’s liabilities has changed.

Were interest rates to rise – and there are obvious signs that they soon will – this would ease the pressure on Aga.

Three small cap stocks

For example, broker N+1 Singer estimates that a c.125-150 basis point rise in yields would eliminate the deficit entirely.

If the recovery in the housing market continues, then Aga could be in something of a sweet spot, especially given the performance correlation between Aga and mortgage approvals – which are beginning to pick up but are still some way off their pre-crisis peak. The story is one of cyclical recovery, augmented by an enhanced product portfolio, with operational gearing on the back of a leaner cost base.

On the subject of upside potential, it is interesting to note that 2013 margins of only 3.3% compare to the company’s target of 10%. For 2014, broker Canaccord notes, “if we take the 6% order intake increase and translate this into revenue growth – this is likely to be conservative given the acceleration – 2014 sales get to £265m (coincidently our forecast) and apply a 35% drop through, operating profit increases by £5.3m to £13.5m, which is higher than our forecast of £12m.” The broker sets its price target at 300p (10x “potential peak earnings” of 30p), suggesting upside potential of almost 100%.

AGA CHART

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www.t1ps.com

House builders are looking a little shaky at the moment as investors await interest rate rises and the government and Bank of England prepare to clamp down on ‘risky’ mortgages and tone down the Help to Buy scheme. However, for those who remain convinced that a housing recovery is becoming entrenched, this could provide a short-term buying opportunity in house building stocks.

In fact, Telford is so confident it expects to double profits again by 2018 and predicts cumulative pre-tax profits to be in excess of £120m – a figure around two thirds of the current market cap – over the next four years. This suggests that the company will be well placed to dramatically step-up returns to shareholders in the coming years. Crucially, however, Telford has been keen to point out that the vast majority of its sales have been made without the assistance of the Help to Buy scheme, so the company is unlikely to face any problems should the government decide to restrict the scheme in the future, as now seems likely. In any case, the average price of houses sold increased to £400,000, up from £353,000 a year earlier, which helped raise operating margins to 17.1% from 9.7% last year.

We believe one of the better placed but less well-known stocks in the sector is Telford Homes (TEF). This East London-focused house builder recently reported a more than doubling of pre-tax profit to a record £19.2m and an 83% increase in the full year dividend to 8.8p per share for the year to March 2014. The company’s forward order position is nothing short of bulging, with 98% sold for the current financial year and over 70% and 25% pre-sold for the 2016 and 2017 financial years respectively. Furthermore, visibility even stretches out to 2018, when the launch of its Stratford Central development (where 95% of the 157 open market units were sold in just four weeks) also begins to underpin profits from then on. The company estimates that the pipeline was worth £875m in future revenue at the end of March, up from £627m a year earlier.

“The company’s forward order position is nothing short of bulging, with 98% sold for the current financial year and over 70% and 25% pre-sold for the 2016 and 2017 financial years respectively.”

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The strong (40%) increase in the development pipeline and underlying house price inflation (which was between 10-15% during the last year) prompted broker Shore Capital to significantly increase its earnings forecasts on the back of the results. For 2015, it now forecasts pre-tax profits of £23m, which equates to earnings per share of 30.3p.

Furthermore, it now sees earnings per share rising to 40p in 2016 and then to 46.7p in 2017, by which time the shares could be yielding 5% based on a forecast dividend of 15.6p. With its strong forward order position and development pipeline, combined with the structural backdrop of demand/supply mismatch for non-prime housing in inner London, Telford appears reasonable value on a current rating of just 10.3 times with net cash of £4.8m on the balance sheet.

Three small cap stocks

TELFORD HOMES CHART

When people buy houses they tend to want to fill them up with nice shiny new things pretty much immediately. The resurgence in consumer confidence seen in recent months offers significant growth prospects for companies like consumer credit company S&U (SUS), which has built a significant business on the back of the exit of a number of major players from the direct unsecured lending markets following the financial crisis.

Results for the year ended 31st January 2014 – another year of record profits – saw pre-tax profits grow by 21% to £17.3m in the year on the back of revenues up by 11% at £60.8m, with earnings per share up by 22% at 113.2p.

“Dividends per share have now grown by 69% since 2009, while cover over that period has increased from 1.56 times to over two times.”

Growth in the loan book took net assets 14% higher to £69.4m, and an additional £15m medium-term borrowing facility saw total borrowings increased to £32.4m from £20.6m, taking group gearing from 33.7% to a still conservative 46.6%.

A final dividend of 24p was declared, taking the total dividend for the year to 54p, an increase of 17%. Dividends per share have now grown by 69% since 2009, while cover over that period has increased from 1.56 times to over two times.

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www.t1ps.com

At the divisional level, Motor Finance profit before tax was up by 42% to £11.5m, driven by 26% revenue growth and record collections quality. New loan transaction numbers increased by 38% and live customer numbers rose to 18,000. Meanwhile, Home Credit profit before tax was slightly down at £5.8m from £6.1m in 2013, which the company described as a “creditable result” given lower levels of consumer confidence in the first three quarters of the year and benefit changes which mainly impacted the first half.

This was accompanied by an improving level of customer quality, as highlighted by current levels of collections and arrears performance.

S&U CHART

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Shares in S&U have now been on an extended bull trend since early 2009, but at the current 1,840p are trading some way off the all-time high of 2,105p. The business is now capitalised at £217.4m. With broker Canaccord having pencilled in earnings forecasts of 151p and 192p for FY15 and FY16 respectively, the shares trade on a prospective multiple of 12.2 times falling to 9.6 times. The broker also expects a dividend of 60p to be paid in FY15 rising to 66p in FY16, which suggests a yield of 3.3% rising to 3.6%.

These metrics look reasonable value against the company’s strong track record (earnings grew at a compound annual growth rate of 16.6% between 2009 and 2013), prudent business model, and the improving backdrop for the UK consumer.

July 2014

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Zak Mir’s Monthly Pick

ZAK MIR’S MONTHLY PICK

BUY LONMIN (LMI): ABOVE 230p TARGETS AS HIGH AS 320p

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Zak Mir’s Monthly Pick

Recommendation Summary:

Technicals:

Since gold and precious metals peaked out in the autumn of 2011 one of the best ways of losing money has been to try and find the floor in the wake of the decade long bubble bursting.

As far as the technical picture is concerned it can be seen on the daily chart that we are experiencing the advanced stages of an extended bear run. This was started by multiple resistance points in the £3.60 zone last August, with a final failure in this area in November confirming an extended period of weakness was on its way.

Clearly, being attracted to stocks like Lonmin, that are heavily geared to the fate of precious metals such as platinum, is a way of gaining exposure in a highly leveraged way to potential upside after the post 2011 losses for this asset class. Of course, as has been well documented, we have seen shares of the South Africa focused miner ravaged in recent months by the particularly turbulent politics of that nation as a general backdrop, as well as industrial action in its chosen sector.

However, the buy recommendation for Lonmin shares in July does appear to have the odds stacked in its favour now that the strike is over and given that the shares have not reacted as positively as some would have hoped. With the stock still close to the lowest levels of the past year, though finding stability, it should be the case that those backing Lonmin now should be able to reap decent rewards as the company returns to some semblance of normality over the second half of 2014.

In terms of the position going into the summer of 2014, it can be seen how we have already been treated to a double bounce off the floor of a broadening descending triangle formation.

“With the stock still close to the lowest levels of the past year, though finding stability, it should be the case that those backing Lonmin now should be able to reap decent rewards as the company returns to some semblance of normality over the second half of 2014.”

From the perspective of the bargain hunters it can be said that the big plus, as far as June’s price action was concerned, came in the way that the former May floor at £2.33 was recovered so quickly after the temporary trap below this level.

The implication now is that at least while there is no end of day close back below £2.33 it is appropriate to look for further upside. This is especially the case given the way that even through the post August decline we have seen a decent gyration for the shares within the broadening triangle formation.

The latest double test of the triangle floor implies that there could now be enough momentum in terms of an intermediate recovery to take Lonmin back towards the 2013 resistance line, currently running at £3.20.

Cautious traders would be waiting on a fresh technical catalyst, such as an end of day close above the 20 day moving average at £2.52, or a break of the main RSI resistance line from January running through the 45 level on a similar end of day close basis.

July 2014

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Zak Mir’s Monthly Pick

LONMIN CHART

Recent Significant News: Metal Miner 24th June

The three-year agreement, which is effective from 1 October 2013 to 30 June 2016, will end the five-month strike, which has crippled the South African platinum industry.

South Africa’s platinum mining strike is finally ending after a five month work stoppage. The strike by roughly 70,000 platinum workers wrought massive damage - to the bottom lines of companies, to the lives of workers and to South Africa’s fragile economy. Platinum producers said they lost more than $2 billion in revenue since the strike started, while workers lost nearly $1 billion in unpaid salaries.

Mining analysts say it will take at least three months to get production back to the prestrike levels. The world’s three-biggest platinum producers - Anglo American Platinum, Impala Platinum Holdings and Lonmin PLC - said they each lost around a third of their annual production.

RNS Statement 24th June Lonmin announces the settlement of the negotiations with the Association of Mineworkers and Construction Union (“AMCU”) about wages and conditions of service. Employees are expected to return to work on Wednesday 25 June.

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Commenting on the signing today Chief Executive Ben Magara said: “The signing of today’s agreement brings to an end the extreme hardship suffered by all stakeholders, the country, our communities, suppliers and in particular our employees, over the last five months. We believe that signing this agreement with our majority union is the only way forward in re-building our business.”

Zak Mirâ&#x20AC;&#x2122;s Monthly Pick

The key points of the agreement are: - Overall, the lowest underground basic salary will increase by R1,000 per month for each year; - Employees in C-band will receive increases of 8% in year 1 and 7.5% for years 2 and 3; - The living-out allowance will increase from R1,950 to R2,000 per month in year 1 and be kept constant thereafter for the period of the agreement; - As is normal in backdated agreements, all employees will receive, within 7 working days of their return to work, the back pay due to them from their 2013 increase date until 22 January 2014, the day prior to the start of the strike; and

At Lonmin we have been looking at an extended and complex crisis for the company since the start of the year. The on / off nature of the industrial dispute and the false dawn endings have not helped. But it could very well be that this ongoing uncertainty is actually the factor which causes those who are short of Lonmin to get hit hard when the newsflow finally turns and stays positive.

It remains to be seen how much the final tab will be in terms of the cost of the strike and what action may be required on the part of company. But it is notable that Lonmin has had to suffer a total closure of its operations as compared to only around half for rivals Anglo American and Impala Platinum Holdings.

- Going forward, the Company has agreed to alter the anniversary date of its annual wage increases for all non-management employees to 1 July from 1 October in order to align with industry peers.

Fundamentals: In terms of the fundamental argument in favour of Lonmin, it may be worth asking the obvious question and attempting to get it out of the way before focussing on the nitty-gritty of this situation.

â&#x20AC;&#x153;The nightmare scenario is that the R word will unveil itself. However, it could very well be that a rights issue to secure the financial position may turn out to be the most bullish factor which appears this year.â&#x20AC;?

Given all the strife in South Africa in terms of industrial relations and politics as a whole, why would mining companies allow themselves to be so vulnerable by operating there on such a grand scale?

Of course, historically, the rewards here have been massive. So the answer may be that at this point in the cycle, where precious metals have been on the back foot for so long, even industrial action costing nearly $2 billion to date may be a price worth paying for those involved in this lucrative space.

The nightmare scenario is that the R word will unveil itself. However, it could very well be that a rights issue to secure the financial position may turn out to be the most bullish factor which appears this year.

But as was suggested in the recommendation summary, a buy bet on Lonmin is more than just a play on a bombed out mining company. It is also a general long call on the underlying asset class of precious metals coming back into fashion after a severe retracement over nearly three years.

Given how highly geared mining companies tend to be in relation to what they pull out of the ground, one would expect a decent bounce here anyway in the wake of recent geopolitical issues resurfacing both in Ukraine and particularly in Iraq.

Precious metals remain a favoured safe haven, and this is an effect which may be exaggerated over the summer of 2014 given how U.S. dollar strength and QE tapering fears have tended to keep a lid on the upside so far. This is not expected to be a state of affairs that continues for much longer, as the sharp spike for gold back above $1,300 illustrated very well in June.

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Sporting Index

SPORTING INDEX

World Cup Spread Betting Update & The Open Preview 78 | www.financial-spread-betting.com | July 2014

World Cup Update

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Sporting Index

As I write this on Friday a pang of sadness comes over me. For today is the first time that we haven’t had a World Cup game since the tournament started. It does at least give fans, bettors and the traders at Sporting Index 24 hours to draw breath after a phenomenal start to the tournament.

There have been goals aplenty – 137 in fact after the group stages. Sporting Index predicted there would be 158 goals in the whole World Cup – that has now been pushed right up to 175.5. There were 18 games in the group stage in which one team scored at least three times.

It was a bitterly disappointing campaign by England.

I had advised selling their team total goals at 5.1 and, having hit just two in their three games, a profit was secured. The Italy game looked even more winnable in hindsight, with both the Costa Ricans and Uruguay taking three points off the Azzurri.

The stars have shone too. Thomas Mueller is on course to become the first man to win the Golden Boot at two World Cups. His haul of four has been matched by the magician Lionel Messi and Brazil’s star man Neymar at the time of writing.

The Colombians were put up as having a live chance and they stormed their group, taking nine points and making light of suggestions they’d struggle for goals without their star man Radamel Falcao, hitting nine without him.

I’m assuming they will have beaten a Luis Suarez-less Uruguay by the time you read this and they will be a match for any side.

But how best to profit as Brazil 2014 reaches the business end? While total goals buyers in matches have taken the boys in Kennington to the cleaners – the average of 2.85 goals a game smashing the 2010 haul of just 2.3 in South Africa – expect defence to come to the fore as teams vision themselves taking glory.

It’s a high-class last-16 and assuming the big guns all make it through, matches will surely be far tighter with so much at stake. Selling total goals and also buying the time of the first goal at around the 30 minute mark in matches could be a profitable strategy as countries look to keep it tight early on.

We all love shocks, and you’d have got fantastic odds on holders Spain, four-time winners Italy, dark horses Portugal and serial underachievers England all being dumped out in the first round.

Costa Rica started the tournament with the lowest spread of all the 32 teams on Sporting Index’s Outright 100 Index, but defied the odds to top the ‘Group of Death’. Ahead of their second-round tie with Greece, shrewd punters who took a chance on the plucky outsiders know they had made a profit of 22 times their stake before a ball had even been kicked.

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“selling total goals and also buying the time of the first goal at around the 30 minute mark in matches could be a profitable strategy as countries look to keep it tight early on.”

World Cup Update

I wasn’t keen on the chances of the hosts Brazil pre-tournament and, even if they have come through a tough game with Chile, the pressure will be cranked up to fever pitch and the Selecao have hardly given the impression they have relished it so far.

Argentina have long been my idea of the winner but, without the goals of Messi, they would have struggled to qualify from a weak group. Sergio Aguero is now injured and wasn’t sparkling anyway.

“it’s a high-class last-16 and assuming the big guns all make it through, matches Will surely be far tighter With so much at stake.”

France should have eased past Nigeria by then and it’s worth having a small buy of Les Blues for outright glory as they look a totally different side to the one that finished bottom of the pool four years ago amid internal strife.

Switzerland were battered by France but there were encouraging signs in their other two group wins and they’ll give Argentina a game.

Remember, with sports spread betting, losses may exceed your initial deposit or credit limit.

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.COM 82 | www.financial-spread-betting.com | July 2014

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July 2014

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Sporting Index

Sports spread betting on The Open Golf spread betting with Sporting Index guarantees excitement and you will be glued to the action right until the final putt.

Here are a few of the most popular markets for The Open at Royal Liverpool Golf Club, Hoylake which tees off on the 13th July.

Leaderboard Index A prediction on where every player in the tournament will finish. Points are awarded on the following basis: 80pts if the player finishes 1st, 40pts for 2nd, 30pts for 3rd, 25pts for 4th, 20pts for 5th, 15pts for 6th, 10 pts for 7th and 5pts for 8th.

Even leading players will be available at a reasonable spread. Recent US Open winner Martin Kaymer will be well-fancied to double in July and if he turns up in the same form he will be worth supporting.

Finishing Position This market allows you to bet on where every player in a tournament will finish right from first place to bottom place.

For example, for The Open, Phil Mickleson might be 21-24. This means Mickelson is predicted to finish 22nd or 23rd.

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If you thought he would finish higher than 21st, you would sell, and if you thought he would have a poor tournament you would buy.

Hotshots How many points a selected group of golfers will get in a tournament. For example, we might lump together the four top European golfers in a Hotshots bet at The Open.

Points are usually awarded based on the following: 25pts per named player finishing in the top 10, plus a 50pts bonus if any of the named players wins the tournament.

My Bankers Simply pick three players for a specific round. 50 points are awarded if all three of your chosen players win their matches and 10 points per chosen player that wins by four or more strokes.

Winning Score A prediction on the winning score at the end of a tournament.

Sporting Index might make the spread for The Open 278- 280. If the winning player hits 68, 69, 64 and 70, they would make-up 271.

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July 2014

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The Best of the Evil Diaries

THE BEST OF THE

Evil Diaries

The man the Daily Mail dubbed “The King of the Short Sellers”, Evil Knievil (aka Simon Cawkwell) is Britain’s most feared bear-raider.

He mostly famously exposed the fiction that were the accounts of Robert Maxwell’s Communication Corporation, an event which helped to earn his pen name.

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The Best of the Evil Diaries

“i cannot imagine anybody buying shares in foxtons or, as it happens, any other agency Which is confined to this country - it’s not Just bad in london. as regards the timing of a short, i am rather less certain.”

In the same vein, he also predicted the end of Asil Nadir’s infamous Polly Peck fraud. A big man with a bigger reputation, Evil Knievil famously made £1mn by short selling shares in Northern Rock during its collapse. He also uses his knowledge and experience to buy shares, often resulting in the same devastating effect.

Three times a week Evil provides his thoughts and musings on the markets only at theevildiaries.com He doesn’t just deliberate about the financial markets on The Evil Diaries but also comments on politics, current affairs, which horses/ sports bets are his latest favourites, with the occasional film and book review thrown in for good measure.

As a result, I cannot imagine anybody buying shares in Foxtons or, as it happens, any other agency which is confined to this country - it’s not just bad in London. As regards the timing of a short, I am rather less certain.

I think it is also tempting to short housebuilders but the backdrop of this industry is that, given this country’s mad policies on housing, there is a role for these companies to solve matters. So I’ll leave these alone.

Here we take a look back on the highlights of Evil’s diaries in the month of June

2nd June 2014 After a long delay, Ignacio Salazar, CEO of Orosur (OMI), has declared that he bought last Friday 150,000 ordinaries at 24 cents Canadian. I know he thinks the shares very cheap since he told me that this is his view. And unless I am completely bonkers it is entirely reasonable to decide merely on published figures that the shares are cheap.

Orosur is capitalised at around £11m. But it must be making getting on for that sum in pre-tax profit, which in turn is represented by hard cash. To be sure, there is a central overhead of $10m for overheads and there are cash drains in the unproven projects and, now, Colombia. But shareholders can reasonably look forward to a thick dividend - I will not be the only fellow calling for cash.

9th June

4th June 2014

Green Dragon Gas (GDG) are now capitalised at 540p at £770m as against net assets, reported today, as at 31st December 2013 of c. £360m. One is asked to believe the realisability of these assets. I do not.

I have never taken Foxtons (FOXT), surely the most aggressive agency operating in central London, seriously. Even though others have. Yesterday, its CEO resigned, having trousered a huge sum. I can see it from his point of view: the central London market is dead. And are you surprised?

Tangiers Petroleum (TPET) is edging up again, now 17.5p. We are now only days away from a drilling result. Given that the punters have recovered their courage - just look at Leni Gas (LGO)’s revival Tangiers might move a lot higher. A dry well would of course have quite the opposite result....

July 2014

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The Best of the Evil Diaries

11th June I bought Concha (CHA) in a placing about five years ago (when it sported another name). I paid £25,000 then. Yesterday, I sold out for £17,000 and I reckon I got a jolly good price at 2.15p. There is a few pence in the balance sheet and a whopping £25m in hope value. It is surely impossible to see this valuation justified and the price must collapse when the placing deal is announced. To me, this is a clear virtually risk-free short.

13th June I still do not understand what is going on at Clear Leisure (CLP). Does anybody?

Just to stay in the swing I yesterday bought 100,000 Gulf Keystone (GKP) at 75p. I am no judge of these extraordinarily labyrinthine developments in the Middle East but it does seem as if Kurdistan is doing quite well. That’s bullish for Gulf Keystone. My only regret is that I forgot that Gulf Keystone has upgraded to a full listing which meant stamp duty.

Grrrrrr.... I kissed goodbye to them this morning at 83p.

This really may be the moment to buck the trend in that, although floated at 226p and now at 186p (and therefore likely to suffer the great hangover of failure), there is a compelling case to get involved.

MySale does not take stock positions and is inherently well placed to shift huge lines of stock at healthy margins. I am no admirer of Sir Philip Green but I have to hand it to him here. It really does look as if he is on the right path. I bought 25,000 at 182.5p.

20th June I took 20p profit on MySale (MYSL) by selling at 201p. But I doubt that that was the correct approach.

The fact is that The Mashley and Phil are very thick pals. Further, The Mashley is the UK’s finest retailer (or so I am told). He thinks MySale will work.

(Otherwise he would not have bet.) MySale is therefore probably still a good long term bet and, most unusually, may go above the flotation price of 226p.

16th June

20th June

The chart service compels a purchase of gold, now $1,280, and a short of EUR/USD at 1.352.

I am well ahead on Ascot and therefore playing with the bookmakers’ money. I have therefore plunged on Adelaide in the 3.45 and taken £20,000/£50,000. I am told that this is a gimme.

I got £11,000 Vialogy (VIY) (10m at 0.11p) in the recent placing and think that a sale now at 0.16p is probably premature. The climate for biotechs is undoubtedly good.

I shorted 50,000 Globo (GBO) at 57p since I reckon that it has recovered enough. We’ll see.

18th June What may be interesting amongst all the online flotation failures is the case for MySale (MYSL).

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Finally and most exceptionally - for I am not a vintner - those of you who fancy very good claret should instantly go to Vineyards Direct and grab an offer of Pauillac 2012. It’s circa £250 a case and will need to be stored for at least two years. But this is real value and therefore justifies a place in this column.

The Best of the Evil Diaries

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Robbie Burns’ Monthly Trading Diary

ROBBIE BURNS’

monthly trading diary Hurrah! It’s holiday time! I’m off with my family for a road trip around California, so I won’t be in the next two issues of the mag but will be back in October.

Awwww. Missing you too! That’s too, not two. This mag has a big readership you know.

90 | www.financial-spread-betting.com | July 2014

Robbie Burns’ Monthly Trading Diary

I don’t personally expect to get up to much trading this summer as our market will be nearly closed by the time I wake up in the US. However, I have noticed some interesting companies that have recently come down 30% or more off their highs. That is, quality companies that have been hit for, I think, temporary reasons.

So I’ve been buying some of these, expecting to hold them over the summer while they recover.

So here is my list of potential summer recover play sizzlers! I’ve already snapped them all up as I write except for Asos, where I am still waiting.

1

Telecom Plus

This has fallen a long way from its high, but looks a great one to snap up near recent lows for potential big returns. It provides utilities, phone and broadband services sold by independent distributors. The company reckons profits will be up to £63m soon – a big jump.

There’s a nice dividend too. Customer service is highlighted as excellent by Which? Magazine, and the company is bullish on its prospects after recently buying its energy customers from N Power, enabling it to ensure a leap in profits. If it ends up being a cold winter, watch for massive gains by next summer.

TELECOM PLUS CHART

July 2014

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Robbie Burns’ Monthly Trading Diary

2

Asos

Well, I’m sure you all know what Asos does – sells clothes on the internet. It was the darling of the market until recently and it has more than halved quite quickly on the back of two profit warnings.

There was a fire at the warehouse too but this didn’t seem to really affect the shares given the firm was fully insured.

ASOS CHART

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The rate of the decline is stopping and it looks like it is getting time to buy what is a brilliant company, somewhere at a near long-term low. A rise in Sterling did some of the damage – that won’t last forever – and, with its strong brand and cash generation, this looks like a perfect buy for great gains to come.

Robbie Burnsâ&#x20AC;&#x2122; Monthly Trading Diary

3

Iomart

Cloud computing group Iomart looks very cheap after coming back quite a bit from its highs. It is considered a high-tech share, but is not on a massive tech rating, and at least there are real profits which are climbing sharply.

Indeed, I thought Iomartâ&#x20AC;&#x2122;s recent statement was excellent, with adjusted profit before tax growth of a very decent 37%. With a dividend up 25% and a company that is generating good cash flow, now looks a great time to get in.

IOMART CHART

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Robbie Burnsâ&#x20AC;&#x2122; Monthly Trading Diary

4

Vectura

Vectura is a drugs company well down from its highs, giving investors the chance to get in at a great price as its future is solid. It has a superb pipeline of products, specialising in drugs and inhalers to help those with airway related diseases.

VECTURA CHART

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The company also has partnerships with all the main drug distributors and recently got a ÂŁ10m payment from Glaxo. A lot of its drugs and products have been receiving approvals in various countries so this one looks a potential giant in-the-making, and at this price is well off its highs so looks one to pick up.

Robbie Burns’ Monthly Trading Diary

As they say, please do your own research on these shares. I would also point out there is a lag between me writing this and you reading it. So be aware that they may have already gone up (hope so!) or perhaps went down some more – giving the potential for even bigger bargains.

That’s because you can set a stop loss to get you out if you’re catching a falling knife. If you’ve got it right and they keep on recovering, you can then just hold on. Perhaps one way of doing it would be to buy a far quarter, such as December, on the spreads.

When you’re buying recovery stories, spread bets can be a great way of doing it.

Have a great summer and see you again when the days start to shorten!

In the meantime if you want to read more by me, the good news is that the new edition of my book “naked trader” has just been published! You can get naked trader 4 only from my website over the summer and from Amazon from September.

The book updates naked trader 3 which I wrote in 2011 – a lot has happened in the market since then and I cover all the changes. There are tons of ideas, trader stories, psychology, biggest trading mistakes and 20 trading strategies to make money.

It’s only £14.99 and the first 500 who order it get a free pack of Naked Trader T-bags made from only the best tea!

To get ader naked tr e 4 click th he book to t left

July 2014

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Anton Kreil

Anton Kreil

How NOT to be the Monkey in the Market part 2 Following up on last monthâ&#x20AC;&#x2122;s interview with Zak Mir, Anton Kreil gives more valuable information on how not to be a monkey in the market by doing the opposite of what you are told to do by the brokers.

July 2014

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Anton Kreil

Over the last three years the Institute of Trading and Portfolio Management have been delivering live trading seminars to thousands of delegates around the world. Initially with a focus in the U.K. the Institute has grown quickly to deliver their online educational programme the Professional Trading Masterclass (PTM) Video Series, teaching thousands more people around the world the real truths behind the retail trader industry and also how they can become successful in the long term.

The Institute has worked tirelessly over this period to bring this to people’s attention by completing over one hundred and fifty live seminars globally and by delivering the truth about the industry to thousands of people. Now you can get the truth too! The knowledge that the Institute has will simply shock you and change your entire approach to trading the financial markets. Here are a few observations from our “Don’t be The Monkey in the Market” free education document.

Doing The Opposite What all beginner traders should be doing is the opposite of what retail brokers tell them. You should not be opening trading accounts with miniscule deposits and leveraging one hundred times to trade FOREX and ten times to trade stocks, sector products, indices and commodity products. What you will find is that if you want to open a CFD trading account, then you will need more money to do so (usually £5,000-£10,000) and to open a spread betting account you may need as little as a few hundred pounds.

Trading a product that also has no tax liability if you win is also tempting. However, the numbers speak for themselves, with 90% of retail traders losing 90% of their money within 90 days.

The responsible approach and the approach that all professional traders take is to not abuse leverage and understand how their liabilities look from the outset. The sweet spot of leverage is four to five times what you deposit on margin (equities) and six to eight times (FOREX).

However, what you deposit on margin should be a decent amount of money. This amount should be north of £10,000 ($16,500) in the UK and $25,000 plus in the United States.

Professional traders know that when you start out in trading you must start in the same way as those who have multiple years’ experience. The parameters you must stick to are simply numbers and the numbers are unemotional. If you break these parameters you run the risk of being in the 90% because you are doing what the broker wants you to do. Depositing a small amount of money, over leveraging and basically attempting to gamble your way to a level where you intend to “do it properly” simply won’t work. You just have to do it right from the outset.

“The responsible approach and the approach that all professional traders take is to not abuse leverage and understand how their liabilities look from the outset.”

Doing it right involves three things: i) Getting a professional trading education from a real professional trader (not a broker or a broker in disguise - aka a “trading educator”). Both have an agenda and it creates conflicts of interest. See Edition 1 of the “Monkey in the Market” for more information.

This is one of the broker tricks to distract you from what is important. Opening a small account is more tempting than opening a decent size account.

Using the broker’s leverage as much as possible is also more tempting because it’s their money not yours.

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ii) Not opening a trading account with a small amount of money and having a pre-determined number in your head, which when you reach you intend to start trading “properly”. You will simply lose and the broker will win.

How NOT to be the Monkey in the Market

You will spend the rest of your life (or until you realise it doesn’t work), opening spread betting accounts with small amounts of money and gambling it to zero. This is something professional traders call “The Dumb Money Merry Go Round” or in this edition the “Monkey Merry Go Round.”

You must open your trading account with a decent amount of money (in the UK over £10,000 and in the US $25,000+). This will allow you in the first instance to have £50,000 ($75,000) exposure and significantly reduce the chances of you losing money and massively increase your chances of being profitable. There is a minimum requirement in terms of capital that is essential in terms of enabling you to take a professional approach. We are being responsible by telling you this! iii) Don’t open a spread betting account before proving you can make money consistently. Spread betting was invented in the 1970s by Investors Gold (IG) Index for the retail market and is now provided by multiple vendors / platforms. No professional traders spread bet or use spread betting platforms.

It is a product that is 100% designed for the retail market, to enable them to open small trading accounts so they can gamble in the financial markets. CFDs were invented for hedge funds primarily, by Merrill Lynch, in 1992. They are an institutional level product. Hedge funds are offshore investment vehicles and do not have tax liabilities anyway, so they don’t care about spread betting.

CFDs do everything for them.

When you have proven this to yourself, spread betting may be an option. But not before. You will have a capital gains tax liability if you are a UK resident, however this is a small price to pay in order to ensure that the odds are stacked in your favour from the outset and that you have actually discovered that you are a profitable trader.

If you want to learn how to really win in the financial markets and stand the best chance of being consistently profitable in the long term, then you are going to have to learn how to trade in the same way that real professional traders do. You are faced with a necessary evil. Retail traders have no choice but to use retail broker platforms in order to access the financial markets with leverage. However, you can access these platforms AND do everything in the opposite way in which most brokers and trading educators want you too. You need to contact the nstitute of Trading and Portfolio Management today.

We will show you how to do this and much much more….

Don’t Be the Monkey in the Market (Edition 1) If you would like to apply for the Institute of Trading and Portfolio Management’s full “Don’t be The Monkey in the Market” (Edition 1) Free Education Document CLICK HERE Please ensure you enter all of your details correctly, including your email address and phone number. Please also make sure that you include the text “Don’t Be the Monkey in the Market” in the message field.

Professional Trading Masterclass (PTM) Video Series

As a retail trader you must emulate the professional trader, trade with CFDs first and prove to yourself that you can make money consistently in the financial markets.

In order to take advantage of the current prices of the PTM Video Series, please go to www.instutrade.com/education/ and enter the code “sbmjuly” in the promo code areas of either the 1 month or Lifetime Access options. As a Spreadbet Magazine reader you will be eligible to receive 10% off the current prices. This 10% discount code will expire at midnight on 31st July.

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City Apprentice Programme COMPLIMENTARY WORKSHOP

Receive a FREE eBook after completing your registration!

Risk Warning: Please note that Opes Associates Limited t/a Opes Academy is not authorised or regulated by the Financial Conduct Authority and as such is not permitted to offer ďŹ nancial or investment advice to UK resident investors, whether or not the intended investments are regulated or unr as well as up resulting in you receiving less than you invested. Do not assume that any recommendations, insights, charts, theories, or philosophies will ensure proďŹ table investment. Spread betting, trading binary options and CFD's carry a high risk to your capital, can be very volatile and prices ma advice if n

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Knowledge | Wealth | Power

Visit:www.opescap.co.uk or call: 0203 675 8117

regulated. We strongly encourage you to consult an FCA-authorised Independent Financial Adviser before committing to any form of investment. Trading and investing often involves a very high degree of risk. Past results are not indicative of future returns and ďŹ nancial instruments can go down ay move rapidly against you. Only speculate with money you can afford to lose as you may lose more than your original deposit and be required to make further payments. Spread betting may not be suitable for all customers, so ensure you fully understand the risks involved and seek independent necessary.

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Book Review

“In this internationally renowned classic book there is a multitude of information that traders can use to their advantage in understanding the “herding” nature of investing.”

Book Review

EXTRAORDINARY POPULAR DELUSIONS AND THE MADNESS OF CROWDS

BY CHARLES MACKAY A person is intelligent; people are stupid. Whoever once said that must have been referring to stock market manias. It’s an astonishing and unsettling fact that, although first published in 1841, this book describes trends and manias that are as relevant today as they were back then.

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Book Review

In this internationally renowned classic book there is a multitude of information that traders can use to their advantage in understanding the “herding” nature of investing. Originally written way back in 1841, the observations by Charles MacKay of crowd behaviour are as prescient today as they were over 150 years ago. A not-to-be missed book!

His scheme was a spectacular success – but a short lived one – as it collapsed after a bank run in 1720, plunging France into an economic crisis.

At the same time, Law created the Mississippi Company, a French colony trading precious metals in Louisiana. He had exclusive trading privileges in the territory for 25 years, but needed funds to kick-start the operation. He did this by issuing shares and low-interest government bonds, which also served to aid French finances. Shares in Mississippi went sky high as people were drawn to the lure of trading in gold and silver. People of all classes jostled in the street outside Law’s dwelling, hoping to get their names on the share register, and soldiers had to be sent in by night to maintain order.

Pop! Sure enough, the bubble became unsustainable and burst. As Law issued more bank notes, the amount of money in circulation caused the rate of inflation to reach 23% per month at its peak. He devalued shares in the Mississippi Company and, as people began realising their shares as capital for the more valuable coins, the price fell to its original value. This sudden crash caused Law to become a hated man overnight. His scheme had been flawed, but he had genuinely been working towards the good of the nation. It was the irrational speculation of the people that led to the inflated price and ultimate collapse.

MacKay’s basic premise – that humans are dominated by greed and fear when it comes to money – states that you too will succumb to temptation when it’s prevalent all around you. He presents us with three episodes from the past where entire populations have resigned themselves to this madness, sacrificing their homes and committing acts of violence, just for a piece of the action. The dotcom boom of 2000 and the radio boom of the 1920s present similar stories.

Bubble trouble…

Perhaps the best known story is that of The Mississippi Scheme which details the life of John Law – the Scottish economist, gambler, banker, murderer, royal advisor, exile, rake and adventurer (and Evil Knievil’s ancestor). In 1716 he established the Banque Generale, a state chartered bank with the power to issue unbacked paper currency. He believed that increasing the money in circulation would benefit commerce.

“MacKay’s basic premise – that humans are dominated by greed and fear when it comes to money – states that you too will succumb to temptation when it’s prevalent all around you. “In understanding the “herding” nature of investing.”

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Book Review

“Mackay’s narration is intelligent and detailed; he even throws in a good sprinkling of witty anecdotes (the sailor who ate a prize tulip bulb with his herring breakfast thinking it to be an onion and spent months in jail as a result).”

Mackay’s narration is intelligent and detailed; he even throws in a good sprinkling of witty anecdotes (the sailor who ate a prize tulip bulb with his herring breakfast thinking it to be an onion and spent months in jail as a result). He goes on to describe The South Sea Bubble, the sequence of events during the same period in England; and Tulipmania, the 1834-6 tulip bubble in Holland when people would sell their entire estate to convert it into a few bulbs. And before you laugh too loudly at our Dutch friends, this book also points out how Tulipmania spread to Britain and France (although to a lesser extent).

There are common threads in each mania. The initial run when that which is being advanced seems an almost sensible proposition (after all, the internet was going to transform the world and slash the costs of doing business, wasn’t it?); the way that each mania is heralded as a way to end poverty and allow anyone to make money without actually doing any hard work; and how each mania distorts the economy such that productive industries are damaged by the rush of capital to speculation.

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The way to make real money in 1836 Holland was to buy property from those desperate for capital with which to speculate. And as each bubble bursts, we see the start of the blame game with individuals, institutions and, ultimately, governments attacked by those who lost out.

With the horse miles away, the stable door is always bolted. But man is too greedy to be stopped.

Where will the next boom and bout of collective madness come from? Who knows? The thing about manias is that it is hard to spot them until they are well underway. But given man’s innate avarice, there is no doubt that they will still be occurring for centuries to come. This book should be compulsory reading.

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Currency Corner

CURRENCY CORNER

WHY I AM STRONGLY BEARISH ON THE SOUTH AFRICAN RAND

BY Samuel Rae

This month we introduce a new contributor, Samuel Rae, author of the best selling book “Diary of a Currency Trader”. Having completed an Economics BSc Degree in Manchester, Samuel Rae quickly discovered that the retail Forex industry was for him. A short foray into the corporate world drove him to search for an alternative to the more traditional ways of making a living, and it was to the retail FX market that he was drawn and found his calling. Through persistent market participation and extensive education he has grown to become a specialist in both fundamental and technical analysis.

Sam’s personal trading style combines classic candlestick analysis with a simple, logical and risk management driven approach to the financial markets – a strategy that is described and demonstrated in his Diary of a Currency Trader.

I do this simply because my strategy revolves around price action at key historic levels, and I find that, while obviously not 100% reliable, the key levels I work with are much more entrenched in the highly watched, liquid pairs.

Hello SBM readers! For those of you familiar with my trading style and strategy, this piece may seem a little out of place. All I ask, however, is that you bear with me, as I believe that whatever strategy you employ, the trade I am about to describe would fit nicely into any medium to long-term portfolio.

Sometimes, however, I pull myself away from the charts and take a look at what’s going on in the wider world. For the fundamental traders out there, and also for the chartists who like to keep up to speed with what’s driving price action, it will have been impossible not to have heard about the ongoing mining strikes in South Africa. For the uninitiated, here’s a quick rundown of what’s going on.

The two currencies in question are the US dollar and South African rand – USD/ZAR. This pair is somewhat outside what you might call my close family of crosses. I generally like to stick to three majors – the AUD/USD, the EUR/USD and the USD/ JPY.

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Why I am strongly bearish on the South African Rand

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Currency Corner

“in short, the mining strikes have not Just Wiped 2% of south africa’s output from its balance sheet, but Will also hurt production in other industries as a result of decreased disposable income and the Waning demand that ensues.”

In the middle of January this year, about 70,000 miners walked out on their jobs at the three largest platinum mining companies in the world – Anglo American Platinum, Impala Platinum and Lonmin – all located in South Africa. The three companies produce more than 80% of the global platinum supply, and the strikes immediately impacted the price of the industrial metal. As time has drawn on, however, markets have started to recognise that the platinum market is just the beginning. The major implications of the strike are its impact on the South African economy.

The South African workforce totals around 18 million. The 70,000 workers out of circulation from the miners’ strike account for approximately 0.4% of this number. On initial sounding, this may seem small but, when looked at in perspective, it’s actually quite a large number. Large enough, at least, to have a meaningful effect on a range of key fundamental factors such as consumption and production. In short, the mining strikes have not just wiped 2% of South Africa’s output from its balance sheet, but will also hurt production in other industries as a result of decreased disposable income and the waning demand that ensues.

As an average, over the past four to five years, platinum mining generated approximately $4bn in revenues in South Africa, accounting for just shy of 2% of the nation’s total GDP. As a result of the strikes, this output has effectively been wiped from South Africa’s balance sheet. What’s more, this is only the beginning...

The reserve bank of South Africa boosted the nation’s benchmark interest rate from 5% to 5.5% at the beginning of this year. However, with the impact of the strike hanging over the economy, it may be necessary to loosen monetary policy and reverse the hike in an attempt to mitigate any negative effects. With this in mind, it’s extremely difficult to be anything but bearish on the rand at present.

USD/ZAR CHART

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Why I am strongly bearish on the South African Rand

Unfortunately for me, I’ve held this bias since somewhere around the middle of February. One look at the daily chart will reveal my misfortune. Against the backdrop of a weakening South African economy, the rand has, perversely, continued to strengthen versus its US counterpart. I thought my luck had finally turned around on 13th March when a bullish pin bar (circled) formed in the wake of some considerably indecisive action just ahead of key support at 10.6674 and the most recent swing low of 10.5828. The following day’s action invalidated my position, however, and the pair declined more than 4% further before finally finding what now looks to be the longer-term turning point of key support at 10.2710.

“As soon as a signal appears that concurs with my strongly bullish USD/ZAR bias, I will enter long with an initial target of yearly highs somewhere between 11.3000 and 11.4000.”

My favourite set up – the pin bar – is one I have kept an eye out for over the past two to three weeks, but as yet – no such luck!

A decidedly bearish version of the pattern formed on Friday 13th, and in another pair I might well have registered a small-scale short on the expectation of a small correction. In this instance, however, my fundamental bias (and not my predetermined superstition as to the day in question) would not allow me to do so.

As soon as a signal appears that concurs with my strongly bullish USD/ZAR bias, I will enter long with an initial target of yearly highs somewhere between 11.3000 and 11.4000. I believe there may be some profit taking between now and then around the 11.0000 handle, and so I am more than prepared to ride out a little bit of turbulence around this area if an entry signal presents itself before price gets there.

All said, I feel like this trade is as close to a no-brainer as you can get in these markets. I am a strategy man, however, and will not allow myself to enter before a price action signal suggests I should – so here’s hoping.

So how am I looking to register a position? Again, for those of you not familiar with my strategy, I generally use traditional candlestick patterns to both enter trades and dictate my risk management parameters.

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Alpesh on the markets

Alpesh on the Markets WHAT MEN CAN LEARN FROM WOMEN I write to you from Singapore, the financial centre made famous by the trader Nick Leeson, the man who personified the excess, macho culture of the trading world. Interestingly, have you ever noticed how there are no trading or financial scandals involving women? No films have ever been made about the “Fox of Wall Street”, have they?

I’ve just given a speech to a room full of entrepreneurs and was struck by how many are female – far more than I would have found in the UK. In a room with about a thousand entrepreneurs, about 40% were women. But this isn’t reflected in the boardrooms of listed companies. There can be little doubt about male dominance when only around one out of a hundred of the UK’s largest companies are headed up by a female CEO. Even in the US, a similar lowly proportion of women head up Fortune 500 companies.

These figures simply do not reflect the reality of business ownership. Research shows that 46% of all US businesses are owned by women. What’s more, the girls seem to be pretty good at running businesses too.

Employment at women-owned businesses is growing by 18%, compared with 8% for all companies, according to business magazine Forbes. Also noteworthy is that US female billionaires have an average net worth of £1.96bn, compared with £1.45bn for the men.

So why in trading do women not rule the world?

After all, they make great investors as well as entrepreneurs.

A number of studies show that women make better investors than men. In a study of over 35,000 investors by the University of California, Davis, portfolios run by women earned 1.4% per annum more than those run by men. Indeed, single women earned 2.3% more than single men every year.

Elsewhere, a study from the National Association of Investors Corporation, completed over ten-years, found that all-female investment clubs outpaced all-male clubs by producing 23.8% average compounded annual returns, compared to 19.2% for the male clubs.

Poor male performance is often attributed to over-trading, according to the study. Men trade their accounts 45% more often than women. And single men shuffle their holdings 67% more than single women. Perhaps the adage about men’s fear of commitment is true after all.

So what is it that women do in stock picking, research and trading that produces better results, and how can men use this knowledge to close the gender gap?

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Alpesh on the markets

“a study from the National Association of Investors Corporation, completed over ten-years, found that all-female investment clubs outpaced all-male clubs by producing 23.8% average compounded annual returns, compared to 19.2% for the male clubs.”

Alpesh B Patel Alpesh is a hedge fund manager who set up his asset management company in 2004. His Sharescope Special Edition has outperformed every UK company’s fund manager over the past decade, as well as Warren Buffett. He has written over 200 columns for the Financial Times and presented his own investment show on Bloomberg TV for three years. He is a former Visiting Fellow in Business & Industry at Oxford University and the author of 18 books on investing.

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Alpesh on the markets

After all, as a gender we are always ready and willing to learn from women, aren’t we?

Firstly, save transaction costs by not churning your portfolio. Men like to fiddle. Actually they love to fiddle. It’s not a cliché. A UK cabinet minister, Gillian Shephard, once told me that her male colleagues always wanted to change laws. Always fiddling. In trading this means changing the portfolio, being premature in their actions, not waiting, watching and seeing.

Secondly, men should spend more time researching before investing. Fear of making a mistake is 50% to 60% higher amongst women than men, according to the US National Center for Women & Retirement Research. Consequently, women spend 40% more time than men researching their ideas and are also less likely to trade on a ‘hot tip’. Maybe this is because women have been shown in many studies to be less confident, so they lack the aggression of the trigger happy male trader. Men often dive in based on scant evidence, presumably being more assured of their views, but without having the proof to back them up.

Finally, men need to reign in their over-confidence.

52% of men express confidence in their ability to invest wisely, compared to just 38% of women, according to the American Savings Economic Council. In particular, men are over-confident in their abilities to pick market beating stocks. This leads them to enter the market quickly, but to stay well past the point where evidence points to justified exit.

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“a study from the National Association of Investors Corporation, completed over ten-years, found that all-female investment clubs outpaced all-male clubs by producing 23.8% average compounded annual returns, compared to 19.2% for the male clubs.”

There is a fine balance between getting out too soon, and being over-confident and staying in too long. The lack of over-confidence, and thus being willing to admit mistakes, often makes women better traders.

So is there anything that women can learn from the men? I would argue that they could learn how to have a little more confidence in their investing, but not so much as to make them bad investors.

Sign up to our broker partnership and I’ll invite you to free webinars on how to improve your trading whatever your gender: http://inter.tradermind.com

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Technology Corner

TECHNOLOGY CORNER

THE ESSENTIAL HOLIDAY SURVIVAL KIT

By Simon Carter

With summer upon us and the Great British weather just waiting to let us down, many of us will be turning our thoughts to packing our bags, jumping on a plane and heading to sunnier climes. You’ve done your research, you’ve found the perfect spot and you’re ready to go. But, wait, what should you pack? Don’t worry, SBM has you covered!

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Technology Corner

The Bag OK, so for the unimportant things like clothes, toiletries, passports, tickets etc. you should probably look at getting yourself an actual suitcase, but for your essential items, you need to grab hold of the Proporta Gadget Bag (£24.95). Padded lining and durable casing mean that your gadgets will be protected no matter what those baggage handlers do to it, and clever little apertures mean that you can run headphone and charging cables through it as required.

“though the price may be a little rich for some, the five times optical zoom lens With full manual control, raW output for serious photographers, background defocus and a host of other clever little features make this snapper a gem.”

The Camera You’re not going to want to take your top-of-the-range DSLR and all its attachments out on every trip, so you should invest in a solid point-and-shoot too. While many are deriding this area of the market, with claims that smartphones can more than serve the ‘snap shot’ function, you’d be hard pressed to find a phone that comes anywhere near matching the picture quality of the Canon PowerShot S120 (£330). Though the price may be a little rich for some, the five times optical zoom lens with full manual control, RAW output for serious photographers, Background Defocus and a host of other clever little features make this snapper a gem.

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Technology Corner

Downtime You’re on your holiday to relax, and what better way to do so than to fill your case with Lee Childs novels, or the latest from Zak Mir or Robbie Burns? OK, so it won’t be news that you no longer need an armful of paperbacks. But with eReaders now ranging from the sublime to the ridiculous, you need to get the right one.

And, in this case, you should probably stick with the most famous name of all, the Kindle Paperwhite (£109).

Although the functions of an eReader may seem somewhat unimpressive (it displays books, right?), the way that the Kindle handles that task is astonishing and will leave you wondering why we ever bothered with something as primitive as paper! The good news is that the Paperwhite also handles PDFs so you can take Mir, Burns and SBM with you around the world!

When not reading you may be tempted to play the odd game on your smartphone. Those pesky screens though. They seem so big, but as soon as you start prodding onscreen ‘buttons’, suddenly the screen doesn’t seem so spacious. Fortunately the guys down at Gametel (£12.95) feel your pain and have produced a Bluetooth powered controller which clips onto your phone and allows you to play with actual buttons. The range of games is slightly limited, but it’ll add a new dimension to your smartphone.

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Technology Corner

The Apps If you’re going abroad, there are two ‘must have’ apps that you need to download before you travel. The first is Google Translate (Free) which ‘breaks language barriers’ across an incredible 80 languages. Converse normally (well, as normally as you can while speaking into a phone) and Translate will do what it says on the tin and translate into a language of your choice. You can also type in those confusing road signs, or take a picture of that bewildering menu and let Translate do its thing. No more shouting in English for you! Best of all is that the languages can be downloaded for offline use meaning that you needn’t rack up a huge data roaming bill while on your travels.

And that is a major plus point of Navfree (Free), a satnav app with downloadable maps for over 30 countries. While Apple and Google provide their own ‘Maps’ apps, both require constant data connection to download your location, meaning that hefty charges await when you get your phone bill. Navfree doesn’t look as slick as either of those, but all it needs is your GPS connection (which costs nothing) and it will guide you to wherever you choose.

“best of all is that the languages can be doWnloaded for offline use meaning that you needn’t rack up a huge data roaming bill While on your travels.”

The Absolute Essential You can have all the gadgets in the world, but if you’re getting bitten by bugs like a six-foot corn on the cob, your holiday is going to be ruined. So invest a little in the catchily titled Electronic Pest Repeller Unique Pest Control (£26.99) which uses electromagnetic and ultrasonic waves to deter those winged nasties. According to the blurb, it also works against mice, rats, cockroaches, ants and fleas, but if your hotel has a problem with those, you’re probably better off sleeping elsewhere. happy holidays!

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Markets In Focus

MARKETS IN FOCUS JUNE 2014

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Markets In Focus

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MAGAZINE

SPREADBETTING Thank you for reading.

We wish you a profitable July!

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