Chris and Clem Meet Up #3
It's almost a month since Chris and Clem first talked about Retirement Investing.
The young "apprentice" has come a long way since that first, almost by accident, comment that he made about saving for his retirement.
Chris took all that old Clem, the "master," had said to him to heart.
He went away that first Friday evening and despite "having had a few" logged immediately on to Google and Amazon to see what information there was.
His findings: a motherload of information.
He had got the bit between his teeth now. He searched for anything and everything to do with saving for Retirement and everything Warren Buffett.
He had taken in precisely what old Clem had tried so hard to get through to him that saving for retirement is a long-term project.
Short termism is for speculators.
Clem, in his explanations, made it abundantly clear that Warren Buffett was the man to follow. Who would argue with a guy that has amassed over $90 Billion and still counting?
Clem tried to put his old head on to Chris' young shoulders by explaining the folly of short termism.
"Of course," Clem said, "there are lots of people making a living at trading, or "day trading" as they call it. But for every successful trader there are probably a hundred (maybe more) unsuccessful traders."
"Which one would you want to be?"
Before Chris could answer that one, Clem got straight back with: "and even the successful ones did not have it all their own way. Their idea of success is to win more than times than they lose."
"A very risky business. Let's call it gambling. Because that's what it is."
"No, we don't want to know any part of that. I have come to learn that investing for the long term is the way to go. Never forget that. Never"
"Paying stupidity tax, as I call it, is a very expensive way to learn."
"Call it tuition fees if you like. But as Warren Buffett once said, if you are going to learn by mistakes, make sure that those mistakes are someone elses."
"Wise words indeed, and I hope I have got that through to you."
"I know it's tempting to think of hitting a "ten bagger" or even doubling your moeny in a short space of time, but it is rare. So my advice to you is play safe. Warren Buffett has paved the way for you. When in doubt: stop, and think, and then think again."
"Don't try to "get in at the bottom" and "out at the top" nobody can do that. Even Jesse Livermore never managed it. I digress slightly. Jesse Livermore was a great trader alright, but just look what happened to him:"
"He made and lost a fortune four times over, and the last time it really was too much for him and he 'topped' himself"
"And you know what the famous saying is for people that try to buy in at the lowest point?
"Bottom pickers become cotton pickers"
"You are saving for your retirement, which may seem a long way off, but do you remember that first talk that we had, I explained all about Einstein's 8th. Wonder of the World?"
"Good. Then always keep that in mind"
"Now, enough of me rabbitting on, you were going to do some research on a couple of companies and also put your thinking cap on how you might be able to cut down on your monthly budget"
"Right. Pretend you're on some TV game show: your time starts - NOW"
"Clem, I have listened to everything that you have talked about. And I 100% agree with it all"
"But how am I going to grow my Pension Pot if I don't commit my resources? At this time, I think that we've seen the bottom of the market, and prices have even bounced off their lows. Some shares are even making new highs."
"I don't want to miss the boat."
"But I promised to do some reseach on the shares that I had 'short-listed' and here is my overall synposis. I'll do a much more detailed study before I next buy something."
"Looking at my list and in no particular order, here are my initial thoughts:
"BT Group - they have suffered like most companies from Covid-19. They hit a 12 month high of around 210p and a low of 98p. On price alone I thought these were a bargain at 99p and that's why I bought them. Yes, I suppose I might have been a bit impetuous, but time will tell."
"Yes, I know I should have done more research. But I'm learning, and of course, I don't want to lose money either. You won't see me buying any low-cap companies. I am only looking at the larger cap companies. Maybe that will change at some point, but right now, I want to play it plain and simple."
"Associated British Foods - 12 month high 2708p, low 1607p, current price around 1880p"
"The obvious attraction here is Primark. ABF own them. I have often wondered if, and when, ABF will 'float' Primark on to the market. And I'm equally not sure what it would do for the share price of ABF - I suppose that would depend on the offer at the time."
"But ABF is not just about Primark. Food operations account for over 40% of the group's profits last year."
"I shall delve a lot deeper into both these companies this next week."
"As for all the other companies on my 'watchlist' here is a very quick run-down on each of them:"
"I've jotted these down on a scrap of paper, but I think I might start a journal for all my jottings, then after say a year, it would be interesting to see how my thoughts have shifted - if at all."
"That sounds a really good idea" said Clem "now, let's look at your list?"
"This is my very first watchlist"
"For sure it won't be my last, but it is compiled without knowing anything special about the companies just a gut feeling about each one."
"For example: Llloyds Bank. I know naff all about them, except that they are big(ish) with a market cap of £20 Billion. But just look at their share price?"
"It's more than halved, and stayed down there."
"Is this an over-reaction by the markets or are they in trouble? If it is the former, then surely they are a bargain at that level"
"Then take ITV. Their share price has done worse still. Is it because of advertising revenue or what? I don't know, but when I do some detailed research I may find out."
"And Melrose Industries. They are the outfit that took over GKN a couple of years ago. GKN was one of my favourite companies. The takeover should not have been allowed to happen. Scandalous in my opinion."
"What about Cineworld? One of the biggest, if not the biggest cinema chains around. Share price down from 242p to a lowly 21p and slightly recovered at 34p. It looks like they are going bust. I remember these shares being over 300p not that long ago."
"And TUI Travel. Down from 1081p to as low as 254p now trading at around 322p. Will they recover? Will Corona hit back and threaten the travel industry even more? Perhaps we have not seen the last of it. Who knows for sure?"
"I'd like to research all of these companies and more. I hope I can find the time to do so."
"Right now, I've got around seven grand burning a hole in my SIPP account"
"I want to safely put this money to work for me."
"Clem, I know you don't want to give me direct advice, but what advice can you give me?"
"Not a lot, " replied Clem. "I do have my own thoughts about the companies on your list, and a few of my own. But I do not want to be resposible for any losses to your SIPP - for whatever reason"
"You are on a massive learning curve. Enjoy the ride. We've all been there. But you have a terrific advantage."
"How come?" said Chris.
"How come? Are you serious? You have got the benefit of all the experience and all the research done by master traders - past and present. And one man in particular."
"I never had such a terrific edge."
"Seriously - follow Warren Buffett and you will do exceptionally well."
"Chris, the last time we spoke, as well as asking you to delve a little deeper into these companies, I asked you to try and figure out ways that you could save money so that you could comfortably afford your monthly SIPP payments - and maybe even contribute a little more."
"Did you do any thinking along those lines? I have a very good reason for asking you to do this."
Chris, stumbled for an answer, "w-well yes, and no."
"What do you mean - yes and no? It's either one or the other. Did you or didn't you?"
Chris came back a rather limp: "Well, sort of"
"I did some something along those lines but no research as such. I got as far as looking at my in-comings and my out-goings. And I thought that if only I could increase one and reduce the other, then I could find some extra to add to my SIPP."
"But I admit I didn't put anything down on paper."
Clem said insistently, "You gotta commit to writing this stuff down. You are spot on with your thinking about increasing your in-comings and reducing your out-goings. And starting a journal is a great idea. What you now need to do is the 'how to' bit."
Chris nodded in agreement. "I'll do that before we next meet up."
"And one final thing" said Clem, "don't be in such a rush to invest that cash. You've got almost 40 years to go. A few days, or even weeks now, of taking your time will make a big difference."
"Do what Warren Buffett is really good at: be patient."
"Let's start that saving money routine by missing next Friday night. Take two weeks to really think about the two things that will make your future very rosy indeed. Making more money and saving more money."
"Great idea," said Chris, "I'll see you back here in two weeks' time - on the 28th. August"
"Wow! Where has this year gone. It'll be my birthday next month."
Chris and Clem Meet Up - hopefully, the last time before lockdown easing
Chris and Clem Meet Up - at last! They can meet in the beer garden
Chris and Clem Meet Up and it is Chris' turn to do most of the talking. Chris' little windfall has allowed him to widen his portfolio. Chris vows of more.