Outperforming the market but given too much back is a neat summary of the first six months of 2010. Unsurprisingly, its proved much tougher than 2009.

Individual stock mistakes in West China Cement (WCC), Quintain Estates (QED) & Polo Resources (POL) have hit the P&L. I let all three position run for too long & all took too large a position relative to the portfolio without tight enough stops. In short I’d become too complacent due to the excellent market performance since March 09.

Going forward I am looking for the market to rally in the near term, it feels too bearish right now. Beyond that I am unsure, the latest macro figures point to growth slowing but will it stabilise at a lower positive level or are we heading for a double-dip? I will look to manage risk well with good money management and above all protecting capital.

On a micro stock level there are plenty of reasons to be positive, one very nice feature of the current market is the increasing takeover activity at substantial premiums to the current market price. Unlike 2008/2009 companies seem more confident now to make approaches and are seeing value. If the current price weakness continues I think we will continue to see more of this.

The change in the market since late April has been quite dramatic. Volatility has exploded to the upside, the bears are in charge, its been better to sell market rallies rather than buy the dips and it feels more like the bad old days of 2008 rather than the continuing recovery story of the last 12 months.

With the Euro zone troubles growing over the last 6 weeks and talk of China slowing it was only the US that was providing a good growth story. The job numbers out on Friday were therefore a massive disappointment and with the stimulus gradually being withdrawn over the next 6 months there remains a big question mark over whether the private sector will step in and be the engine for growth going forward.

With the outlook for the market changing during Friday afternoon I decided to significantly raise the level of cash in the portfolio, reopen some FTSE down bets and reassess my strategy going forward.

Of course the market is now down around 15% from its highs and therefore some of this news is now in the price, perhaps all of it. I could be acting at the bottom of the market. However at best I see trading over the summer being choppy and perhaps trading within a range and at worst significant further downside. There are still positives out there, with companies reporting improving demand, turnover & profits plus stronger balances sheets, Asia forecast to continue its good economic growth, the US & UK economies are now both growing with positive GDP figures and expecting to grow through the rest of this year, if not as strongly as previously expected. Valuations are reasonable and I still don’t see us heading all the way back to March 2009 lows.

On balance with the portfolio still up for the year & outperforming I feel comfortable getting more defensive, reducing my longs and looking for shorting trades whilst waiting for possible exceptional buying opportunities and a clearer view of future prospects.

So on Friday afternoon I made the following trades:

Sold 2000 shares in Barclays @ 290p
Closed Man Group position, selling 1425 shares @ 239p
Sold 4500 shares in Lloyds @ 56.1p
Closed final Polo Resources spreadbet, £500 per pt @ 3.6p (still long 250k shares)
Sold 275 Soco International shares @ 1609p
Sold £475 per pt in Unitech Corp Parks between 26p & 27p
Sold £20 per pt in West China Cement @ 505p

I opened a FTSE 100 short spreadbet, selling £6 per pt short at an average of 5159

Overall that gets the portfolio around 25% into cash, with some downside protection, a more comfortable position. I am now running current positions with much tighter stop losses and wait to see what the coming week will produce, there is sure to be plenty of action!

Since I started investing my most frequent investing mistakes have not been buying the wrong shares or not buying a share at all. On the contrary it has been in selling existing holdings at the wrong time that has cost me the most money.

Either by holding on too long and selling the entire holding at the bottom or, worse, selling out of a share just before it sets off on a dizzying upward rise.

West China Cement (WCC) was almost the next in a long line of selling mistakes. I closed my WCC position on Friday morning after West China Cement said they were going to delist from AIM, at the same time as listing on the Hong Kong Stock Exchange. I anticipated that other UK investors would now have to sell their holdings causing some weakness in the share price. As it fell back around 10p quickly after my sale I was feeling smug and justified in my decision.

That was where the price fall stopped though and there were clearly buyers mopping up all the shares they could get their hands on and the price started moving back up. In the past I might have stuck to my original decision but experience has taught me (expensively) to quickly change tack when things don’t go as anticipated. I was lucky enough to get back in just above where I had sold (with a 50% larger holding than before). Its up 20% since then and I see this as a hold right into the HK listing.

Elsewhere the portfolio is bouncing back very nicely with the general market. My re-entry in Dart Group (DTG) looks well timed, up nearly 20% in very short order - hopefully more to come there. Polo Resources (PRL) is slowly coming to the boil, given its discount to NAV and the underlying coal & uranium stories I am expecting this one to be a real winner. Finally International Ferro (IFL) has zoomed up strongly over the past week with the FeCr price on the rise and demand situation improving, the strategy of buying it as it dipped down to 30p and below is now paying off handsomely.

The market looks great right now, with plenty of people calling it higher in the short term. A little too good in fact so I am starting to exercise some caution in what I buy and looking to take some profits where some shares seem to have got ahead of themselves. I’d like to have some cash available for when the next sell off comes along.

Nice to see the banks (LLOY) (BARC) and Man Group (EMG) getting a pop over the last couple of days. The market generally has perked up and some of the other holdings in the portfolio have been marked up too. However it could just as easily be straight back down in the next couple of days though so I remain cautious for now and have actually increased my cash holdings a little bit today.

I did a tidying up exercise with Vislink (VLK) and Renovo (RNVO), two small positions treading water now converted into cash ready to invest in the next opportunity I spot. Also I traded out of my CSR (CSR) spreadbet, selling £10 per pt @ 500p for a quick 7% profit. I reckon it might struggle to get past this level for now but I still hold 1000 shares so am bullish over the medium term. The last trade was adding another £500 per pt of Polo Resources (PRL) which is still trading at a significant discount to its NAV and the more time that passes the closer Polo get to realising some of that value in the form of cold, hard cash. I am happy to be patient with this one as the rewards could be significant and downside from here looks limited.

One position that I do want to flag up is Huntsworth (HNT), the global public relations and healthcare communications group. I hold 13,350 shares at an average around the current share price, 63p. They are reporting final year results next Wednesday, Feb 24th. It looks cheap on fundamentals with a PE of just over 8 and a dividend yield of 4.2%, plus the tone from management has noticeably picked up since the summer with increasing confidence in their future prospects. What could really drive earnings growth over the next couple of years is the management reorganisation that Huntsworth have executed in 2009, I expect to see it impact organic growth starting in 2010 and accelerating into 2011. The share price has done nothing for the last few months & I am hoping that the results next week will put it on a few more investors radars.

The market has been all over the place, mostly in a downward trajectory, since the last update and it looks like this volatility could be here for a while longer although today is very quiet with the US market closed. Overall the portfolio remains positive for the year (as I write this at least!) but well off the high it hit in January. The general sell off and a couple of stock specific factors are behind the decline.

Plenty of trading since my last post, the twitter feed and the trade page details it all.

RCG (RCG) has been a big faller over the last couple of weeks off the back of the Nina Wang / Tony Chan trial result. I decided to maintain my holding & ignore the volatility. The fundamentals remain excellent and the share rating paltry considering the performance so far and the future potential of the business. At some point the share register issues will be resolved and I’d then expect the shares to be quickly re-rated.

I have taken a decent sized position in Quintain Estates (QED) recently. This was flagged up recently on the Motely Fool discussion boards and it looks to be a low risk property play with no funding issues trading at a large discount to NAV. The price has ticked up a little bit over the past week and I expect it to gather further positive momentum over the next few weeks. There is still a seller about though so there may be a chance for further buying on any weakness.

I have also dipped back into Man Group (EMG) which has fallen a long, long way over the last few months. Its flagship fund continues to badly under perform but I expect that trend to reverse at some point and overall Man is a solid business that looks too cheap to me at these levels. A tight stop on this one though as it could fall further if the general market heads down.

Overall I am now keeping a closer eye on certain positions with an eye to minimising losses / taking profits and retreating back into cash given the more negative tone to the market. There may be some further downside to come but overall I remain bullish for 2010, especially for the core portfolio holdings where there looks to be some real good value and hopefully positive newsflow in the coming months.

I took my profits in a couple of shares this morning. Both have had great runs over the last couple of months & I think there are other opportunities out there that offer the possibility of greater returns from here.

First I sold my last portion of Globus Maritime (GLBS). 3,400 shares @ 103.5p. A 61% profit (£1300) in just over 2 months is an excellent return but over 100p Globus looks fair value to me. Of course the management are sat on a decent cash pile now & if they put that to work buying some good value ships I will take another look.

Secondly I closed my Geopark Holdings (GPK) trade, taking a 19% profit in just over a month (£660). This was a momentum trade and its gone up virtually in a straight line. Its now hit my price target and is close to its all time high at these levels so I’ve closed the position for now. It remains on the watchlist and on a decent pullback or a break through that all time high price I may buy back in.

Also one of my picks for 2010, Alterian (ALN), released their IMS today. They warned that Q4 revenue & profit may be below expectations & the shares have been marked down nearly 20%. I think this is overdone given the growth prospects going forward so I have picked up 6000 shares at an average of 156p. I might be catching a falling knife here so will be running a tight stop.

I have also closed out half of the FTSE 100 short, buying £2 per pt @ 5506 as the market has come back strongly from its lows this morning.

Kryso Resources (KYS), International Ferro (IFL) & Unitech Corporate Parks (UCP) all look strong today with good buying interest.

First up I trimmed a bit of my Polo Resources (PRL) position, selling £500 per pt at 4.65p. I am now long £3000 per pt. It still looks good value over the longer term but having been oversold, Polo has shot up 25% in the last month & I think it may consolidate around this area for a while at best. If it falls back to 4.25p or lower I will be a buyer again.

The second trade was more speculative, selling the FTSE 100 short £4 per pt @ 5471. Current down about 25 pts on the trade but its a quiet day with the US markets closed. I think there may be a bit more short term general weakness over the next week but will be keeping a v.close eye on this trade and will be applying a strict stop loss!

I also closed out an old, small trade - taking a small profit on the Kier Group (KIE) position. I was looking at building a bigger position here but am not so bullish on the sector or outlook anymore so prefer to concentrate my firepower elsewhere.

The excellent start to the year continues today, Unitech Corporate Parks (UCP), Soco (SIA) and Eros (EROS) continue to edge higher and look good for further gains. On the downside RC Group (RCG) has fallen back today as the company killed speculation that the share overhang issue was soon to be resolved. As a long term holder I continue to be patient! Overall very happy with how 2010 has gone so far. Its good to stack up some profits early on because I feel that the second half of the year will be more difficult.

This year has got off to an excellent start, with the portfolio up around 11% already. Despite such a good start to the year I am, in general, cautious on just how much further the markets can push on. I am not expecting the investing conditions to be as good this year as they were in 2009!

I do think that some individual stocks could really outperform the market and to highlight which ones I am particularly keen on right now I have again entered the StockChallenge.co.uk annual share picking competition. The 5 shares I have chosen that I think will do well over the coming year are:

RC Group (RCG)
Polo Resources (PRL)
Kryso Resources (KYS)
Unitech Corporate Parks (UCP)
Alterian (ALN)

Of course things can’t change radically over the course of the year but for now I think these 5 offer excellent upside, across a range of sectors and geographies.

RC Group (RCG) continues to grow revenues & profits whilst it’s share price lags behind on a lowly rating. I see several opportunities for that to change this year with the resolution of the Nina Wang / Tony Chan legal case being the most obvious. If the share was assigned a standard earnings multiple it could easily double or triple from here & still not look expensive.

Polo Resources (PRL) is my next pick, this is a play on Extract Resources (ASX:EXT) which I expect to be taken out this year at a price considerably higher than its current share price. Polo owns shares in Extract, the value of which is only marginally less than its current market cap. Added to that are its other assets, which I also expect to appreciate in value. Its discount to asset value should be eliminated as it turns those assets into cash if all goes to plan. The share price has the potential to at least double.

Kryso Resources (KYS) is a small cap gold company that is moving towards production over the next couple of years. Valued on the number of Oz’s of gold it has in the ground it looks far too cheap, even given the political & funding issues. If the price of gold remains strong and the up coming feasibility study comes back as expected the share price should move higher over the year, perhaps even to 2 or 3 times its current level.

Next is Unitech Corporate Parks (UCP), I held this one right through last year & reckon it still looks great value here, especially with the commercial property market in India starting to improve. Given UCP’s extreme discount to adjusted NAV (72%) and the probability that they will add value to their projects over the coming year I think the downside is very limited here and the share price could double and it would still be an attractive investment. Management were upbeat in the post result conference call last week, in marked contrast to their commentary over the previous 18 months, and further letting news is expected in the next couple of months. I fully expect the discount to NAV to gradually narrow over the coming year.

Finally is Alterian (ALN), which is one I’ve held in my personal account for a while now. I wanted to have a tech related share to balance to add balance & Alterian won out due to its lower rating versus comparative companies, good earnings growth and its potential to be a takeover target later in the year.

I’m looking forward to coming back to this post at the end of the year to see how it all turned out!

After a fantastic break over Christmas and New Year my feet are firmly underneath the desk and I am getting back into the swing of things. Before looking forward to the year ahead, I am looking back on 2009.

A very fruitful investing year finished with a 96.99% return for 2009, almost doubling my money in a year given the starting capital of £100,000. That meant the total portfolio at year-end stood at £196,987.56. Although off the high for the year (which on October 15th was £202,965.93) given my expectation at the start of 2009 was for a tough year ahead I am delighted at the final return. Some really big winning trades, a few losers and of course the odd missed opportunity that I am still kicking myself about.

Looking at the losers first, the worst single loss was taken on Northern Foods (NFDS) losing £1,450.94 fairly early in the year. A case of bad timing there, selling at pretty near the bottom before the share price bounced back sharply. Fortunately there were not too many losers in 2009, it certainly paid off to not set stop losses too tight and let trades run for as long as possible.

Of course the P&L for the year would have been much better if I hadn’t sold a couple of shares in particular far too early. Topps Tiles (TPT) was one I bought pretty much right at the bottom, around 16p. Unfortuntely I sold it shortly afterwards for a small profit, it then went on to 5 bag right up to 96p. The other big winner sold far too early was Gulf Keystone (GKP), again I was in right near the bottom buying at around 7p. I sold out between 11p and 21p. I good profit but if I’d have held on until 100p+ I could have made over £50,000 more! A costly mis-judgement. In fact in general profits would have been much greater if I’d have held most positions for longer but the market strength continued to surprise me throughout the year.

Of course there were plenty of winners in 2009, the best being the RBS $ prefs which I did hold onto (£6,927.37 profit banked), at least partially, right through 2009. RC Group (RCG) was also a big winner and, surprising me when I checked, my FTSE index & option trades were a big winner too, banking nearly £5k (£4,908.26).

The total return of nearly 100% is also pleasing as I retained a healthy cash balance throughout the year, on average holding about 20% to 25% in cash.

Here’s hoping that in 2010 I can build on the excellent returns of the last year.

A frustrating time over the last week, with the portfolio up, down and all over the place. Some nice gains being offset by some strong fallers.

Globus Maritime (GLBS) has been a star ever since I bought, up over 28% in last week, so much that I have taken a little bit of profit off the table. Its very illiquid & can move quickly in either direction. It still looks cheap to me here & given the big volumes over the last few days clearly other buyers agree with me.

Eros International (EROS) is worth highlighting with a strong move upwards over the last two days. It seems that the large seller may finally be finished and Canaccord Adams reiterated their buy recommendation with a target price of 313p yesterday.

The current volatility is well illustrated by Geong (GNG) & Kryso Resources (KYS), both down about 20% from where they were last week. These type of moves can happen quite often on small caps and its easy to be shaken out of your position. I am confident in the long term prospects of both so I am happy to hold on and in fact added £100 per pt in KYS @ 11p today as some buying came in.

Overall happy with how the portfolio looks right now and am hopeful of a good run for the rest of the month.