Gambling on account by John Bull
There are two diametrically opposed views about buying shares. Either the investor puts his money into a company with the expectation Of long-term growth with no day-to-day worries about following price fluctuations or he takes a limited view on performance, a quick profit his objective.
Quite unabashed I am only going to consider the needs of the latter and in doing so lay myself wide open to accusations of bringing the stockmarket into disrepute, encouraging business more appropriate for the casino or race-track. But why should the speculator overlook this excellent medium in his pursuit of profits?
So over the months to come (providing I don't end up in the debtors prison myself) I shall be selecting shares which seem good short-term situations and where purchase and sale (or vice versa) will be made in the account. Also from time to time I shall advise on dealing on the option market where, with a known risk one gears up, taking a three month view.
What is the procedure for adopting my greedy tactics? Firstly, make sure that the money involved can be safely termed risk capital and isn't next month's club bill. Secondly find an alert stockbroker.
Earlier I said my activities would be confined, to trading in the account. This is a stock market term for what is generally a two week trading period. And settlement date is ten days after the end of the account. The advantage of dealing in this period is that with a small capital base one can operate in far larger quantities of stock than one would normally be prepared to purchase. And the speculator's outlay will be influenced by any potential loss rather than total cost.
Getting down to the mechanics, dealing for the new account starts on the preceding Friday at 5 pm. However, what is termed "new time" dealing starts at 5 pm on the preceding Wednesday and for this privilege one pays about one per cent more than the charge for normal account dealing. There is, incidentally, no stamp duty payable and only one commission rate (for buying or selling). The main advantage of buying earlier is that it gives one the chance of jumping ahead of the next man.
What are the factors that should influence one's tactics, remembering that after dealing the position can be left open or closed at any time in the subsequent trading account? Let us presume we fancy ICI shares will see useful appreciation on a good profit statement. We thus buy on Friday in anticipation of the announcement on the following Thursday. The expectation proves correct and the share are given a good fillip, so we sell. More often than not, however, we will not be alone in our assumptions and if a bull position is too large even if the statement is good there might not be any sustained rise. So remember there is no time for complacency. As a general rule the jobbers initial reaction is to overstate a position.
In future I'll elucidate with actual recommendations. Watch these and if you feel sufficiently encouraged and have the nerve you might be well rewarded. You will certainly not lack for a dull moment.
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