Xela Finance

In this post I’m going to reveal how I made 45% in just 7 months and how it was a lot easier than you might think.

After reflecting on my portfolio I can summarise 3 key points which aided me in achieving 45%. This large gain is abnormal in usual market conditions but in the unusual year of 2020, these types of gains were quite normal.

Key finding number 1 – ‘Buy The Dip’ – This finding is nothing new, it is a golden piece of advice for all investors. Buying the dip in a great company or fund is a great way of averaging down your price/getting a company at a discount. 2020 was a marvellous year for this idea because of the pandemic, numerous great stocks and funds took huge dips because the world stopped. March 23rd 2020 is the day where many millionaires were made, not from selling, but from buying. Some companies on this day had half of their value wiped away, stop losses were triggered, overselling had started, the market was scared. As warren buffet says ‘be greedy when others are fearful’ and that’s what I did.

Late March I bought £600 worth of Wetherspoon stock, at an average price of £8.87 per share. Before the COVID news it reached a peak of almost £17 per share! So, I had effectively bought shares in this company for almost a 50% discount. I believe Wetherspoons is a seriously competitive company, being a favourite amongst the younger demographic and also fairly popular with the older pension generations as it allows them to eat cheap meals. I also thought that after COVID is done and life returns to normality, this stock will thrive just like the hospitality economy thrived in the roaring 20’s after the great pandemic of 1918. I’m currently up 24% in this position and believe it still has a while to go. This method of ‘buying the dip’ also was used with ETF’s like MIDD my FTSE 250 ETF which is up 33%, I also did the same with Taylor Wimpey. However, the strategy with Taylor Wimpey was slightly different because I did buy the dip on it but also the UK government slashed stamp duty so it made it so much cheaper to buy and move houses, I thought this could be a good investing opportunity and it was reinforced when 3 of my closest friends all moved in the same month. Because of this thinking I am up 50.4% in Taylor Wimpey.

The second key finding is – ‘Ride the Trends’ – Throughout 2020 there have been many trends in the market that have been fairly easy to profit from. SPAC’s, Hydrogen Power, EV’s, Bitcoin, Blockchain, Millennial friendly IPO’s and Precious Metal stocks to name a few. I’ve managed to profit off of each and everyone of these types of stocks this year. I’ve managed to do this by keeping an eye on where all the hype is with the help of Fintwit (finance twitter), the use of my finance instagram, yahoo finance and sometimes even YouTube. Just by being on financial social media and seeing what people are talking about and sometimes even joking about, it is fairly straightforward to see where all the money and attention is going. At the beginning of this year I bought a company called Plug Power, you may have heard of it. I bought it for around $4 per share and sold it for around $8.62 per share. I made over 100% but if I still held it to this day it would be up more than 800%. I found this company because it was researching electric vehicles early this year and found out that a lot of scientists believe that hydrogen power would be the best propulsion for a vehicle and the most environmentally friendly long term.

I also invested in a few EV start ups in mid to late 2020 which proved to be profitable because that’s when Tesla started to go parabolic and it brought all of the smaller EV stocks with it. Why? Because that’s where the money and attention is.

Throughout 2020 we were met with numerous economic challenges, no one could work, the economy grounded to a halt and it needed to be propped up by the central banks of the world. Once again, this is where an opportunity comes up. How were central banks going to prop up and restart these world economies? The answer is pretty simple really: Quantitative Easing. Now, that might sound like a complex detailed process but really its kind of like printing money. The central bank buys lots of government assets and immediately resells it on the secondary markets. This increases the liquidity of money in the economy, meaning that the supply of currency has gone up which results in the currency being worthless. In really basic terms, the governments devalued their currencies to keep the economies going, this was also aided with the help of stimulus checks. The stock market went up on this news because it meant that the economy was given a life line, so if you were invested in the market, you profited. But the main point from all of this was, the opportunity was to hedge against currency because of the economic actions taken. Gold and Silver shot up, bitcoin shot up. I made 20% each in my gold and silver positions. I sold most of my silver and still hold some of my gold position although now it is in the negative because of how much attention bitcoin has got.

Following on from this point about currency hedging and how, gold, silver and bitcoin won from this. This was the real starting point of bitcoin finding its feet again and starting its second charge. Bitcoin once again went parabolic, shooting up and breaking all time highs. This time the media were all over it and reporting that big institutions wanted a slice of the action. This was the epitome of money, attention and hype. I knew this was an opportunity for the taking, but I didn’t want to directly invest in bitcoin so I decided to find a way to indirectly invest. Bitcoin Mining and Blockchain companies. I caught the trend at just the right time (and at the time of writing this, the trend is still going). Up 800% in ARGO and 245% in MGTI. Do I think these companies are a great idea for the long term, I’m not sure, ARGO looks like a solid, efficient company but then again this is all a trend at the moment and can come crashing down at anytime. MGTI I definitely won’t hold for the long term as it looks a little bit like a house of cards. The main thing I’ve learnt with these trends is don’t leave too much profit on the table, and have an exit strategy.

My strategy with this trends is, sell half the position at a level that is 3-4x your normal selling percentage. For me 20% is my normal selling target, once a stock hits 20% I usually sell unless there are other factors at play. So 3-4x would be 60% – 80%. Once I hit these kind of levels I’ll normally sell half the position to cover my initial investment plus a portion of profit and then let the remaining half of the position ride it out. Key takeaways with chasing trends are: Have an exit plan, Manage the risk, Don’t get cocky and finally, Know when you’re late to a trend, otherwise you could be left ‘holding the baby’.

The third and final key finding, Disruptive/future industries. I’ve noticed that companies that look to disrupt the future of existing industries or are trying to be the frontrunner in future industries, have profited massively in 2020. With help and publicity from Cathie Woods, the ARK ETF founder. Which are ETFs based on finding companies that are disruptive. She recently created a space ETF which has holdings in Virgin Galactic. I invest directly in Virgin Galactic because I believe it has the power to be one of the most disruptive companies in the world, with the plan to becoming the monopoly of space tourism. Companies like this receive a lot of coverage from the press, some positive and some negative. Hype is good because at the end of the day it drives volume into the company, but it is key to remember that just because there is a lot of hype, doesn’t mean that the companies fundamentals are automatically good. The fundamentals of Virgin Galactic are questionable, as is the market cap for a company that hardly makes money. But I believe the market cap is as high as it is because a lot of people are invested today to reap the rewards of the future disruptive industry VG will dominate.

Based on this knowledge of increasing demand for disruptive companies I am up 100%+ on my investment in Virgin Galactic (SPCE).

What I will say about investing in the year of 2020 is… It was very easy to get good results. Don’t think because you’ve done well in 2020 you’ll do well every year because that’s not how it works. This is why long term investing is key because you don’t have to pick out stocks frequently, and over time, investing in great companies and ETFs will reward you very nicely. Each year the market is different and you have to adapt to these changes so don’t be afraid to get it wrong sometimes. Learning from mistakes is a good way of being successful in the future, this is why every time I lose money in an investment or I see something that teaches a good lesson, I write it down. This way I keep myself in check when investing in years to come.

Thanks for taking the time to read this post, I really appreciate it. If you wanted to get started with investing you can use my link on Trading212: http://www.trading212.com/invite/4KBCADM if you use this link to download the app and sign up you will receive a free share worth up to £100!!! Also, if you wanted to buy some investing meme clothing check out: https://wallstmemes.com/?ref=xelafinance I have a couple shirts and hoodies so I can remind people I’m an early $SPCE investor and to ‘Buy the Dip’. They have loads of cool funny clothing and WSB merch as well.