Setting up and operating the club has taken quite a lot of effort; by me, garindan, underdog and others. My own justification for the time invested was that I envisaged creating a unique online club with a significant membership, which would help imutual both directly and indirectly.
But in addition to the poor performance of our investments (and perhaps because of it), we haven't attracted many members; in fact, I can't remember the last time a new member joined!
Also, I had great hopes for the "Top tipsters" table, which would help to identify who had the best share-picking skills - and this in turn would be to the benefit of the whole club through better investments. But the way that we've gone about voting on buy/sell decisions has often made it too difficult to incorporate into the Top Tipsters calculations. Consider the example of the Barclays "sell" vote, which was not only incompatible with the Top Tipsters algorithm but also required me to constantly monitor the share price in order to determine when the instruction should be executed. And when, after several weeks, that condition was finally met, we found ourselves locked out of the share trading account
For this and other reasons, I propose that in future we operate in the following way:
In addition to being able to resurrect the "Top Tipsters" analysis, I see the benefits of this being as follows:
- 1. Maintain a fixed number of different investments. We have seven at the moment (excl. Share.com); I'd prefer no more than six.
2. At regular intervals (I suggest 2 months), we hold two parallel votes; a new stock to buy and one to sell.
3. Each decision will be a straight choice between 3 stocks. No "If price reaches X" or "None of the above"
4. Once the voting has closed, we execute the "sell" decision first and then use the proceeds, plus whatever cash is in our account, to invest in the "buy" stock. These actions take place immediately at whatever is the prevailing price
5. We automatically apply a standard "stop loss" to all purchases e.g. 20% below purchase price.
- SIMPLICITY. A standard process understood by everyone and easy to operate
- DISCIPLINE. It forces us to think about which of our current shares is underperforming, rather than just clinging onto poor investments in the hope of recovery. The stop-loss should also help in this respect.
- PORTFOLIO SIZE: It stops us ending up with too many different investments, so that we can concentrate our attention and analysis on a manageable number
- TIME-SAVING: All key buy/sell decisions will be focused on a short period every 2 months, scheduled in advance. Hence, we can make time to give more detailed consideration of our investments during this period and hopefully make better decisions as a result. This process would also greatly simplify the roles of the club officers
There are further questions we'd need to answer, such as how to decide what the three stocks should be, how the Top Tipsters table should be calculated and what bearing this should have on anything, but I don't want to open up too many topics in the same thread. Also, note that the above suggestion is mainly about our process, and not what our buying/selling strategy should be - that's definitely one for a separate topic but I'd like to get agreement on the above first.
So what does everyone think?