So I have waited to put in my view on this one until some other replies had come in. My issues with the Club's operation are as follows:
- It is difficult to get sufficient suggestions for shares to invest in, which means the selections to choose from when we do have a vote are normally put forward by the same few members. Quite often I had to do plenty of the work, which doesn't seem fair and leaves us open to a notice investor (me) suggesting what we do
- Richard proposed the same way of running the Club at the beginning as he has proposed now. It was similar to how the old rpoints club used to work and that didn't do that well I am led to believe, not that we are doing that well either... I also thought it sounded like buying and selling shares for the sake of it rather than having any particular strategy. I thought we should do something a little more intricate, based on some insight and a strategy - hence why the Club was set-up in the way it was when we started.
- I don't think we are currently, or have been since we started for that matter, investing in particularly favourable conditions. Whilst the FTSE100 might have risen to all-time highs it does mask some particularly worrying volatility caused by BREXIT.
- I think small portfolio size is a red herring for us. We are working with very small investments and trying to learn. If we held 6 different shares, but with more money in each it would potentially expose us more than if we had the same amount split over more sectors and different companies.
- We have had two really bad performers since we began in NCC and Carillion. In both cases we were misled in our selection due to company reports being "less than honest". We managed to escape with a profit at NCC as the fundamentals were actually still there for the company. With Carillion it was a different matter and we lost everything. There are three lessons from this - stick to the plan (i.e. don't invest beyond what was agreed like we did with NCC), do not invest in any shorted shares (Carillion, NCC and ITV were/are....) and take a view on the amount of loss acceptable before we bail out (or make a sale for profit).
- There is a fascination from members that a limit would prevent loss. In our case when the news of NCC and Carillion hit the drop in price would not have meant we sold at the amount of loss we thought would be acceptable, had one been in place. The likelihood is we'd have sold, if selling was even possible, at a very much reduced price that was well below our sell price. We have never taken a general view if that would be acceptable or not. In both cases we had a vote and decided to keep both NCC and Carillion. In one case it worked well and in the other it did not. I can understand why the vote went the way it did in both cases. In the case of Carillion - we'd lost ~£800-£900 and had about £400 equity left in them. It was a case of risking losing the remaining £400 against potentially recouping some of the loss. The "good" NCC experience might have given us more confidence of a turnaround than it should have.....
- Top Tipsters to me is a red herring. I don't see any merit in it apart from being a bit of fun that doesn't really mean a great deal.
- The way we have currently selected and voted for shares doesn't seem to work that well, I don't personally think Rich's suggestion makes this situation any better (in fact I think it puts even greater stress as we'd need to not only select which three shares to choose from to sell but additionally identify three more new shares to vote to buy, every agreed period - which is more often than we currently have to make decisions).
I could go on but the long and short of this is: I think we need to think more out of the box about a workable solution that is in-keeping with what investing in shares is all about.