Editor’s note: This article was first published in January 2013. This is a portfolio update from then: all prices, such as Abengoa from €1.90 to €2.65 and Ezentis between €0.14 and €0.18, the possible IBEX 9,000-point level and the positions described refer to that date.
There was a Christmas rally on the stock markets after all. In November we made some recommendations outside the most popular stocks, both in the IBEX and on the continuous market (Spanish stocks outside the IBEX 35). If anyone took note and got to work, they’ll have made a lot of money, and it’s about time to look at where these stocks stand. I don’t rule out the IBEX reaching 9,000 points, but I’m not personally going to hold on to all of these stocks to see it.
As I mentioned, we were going to follow a speculative investment strategy, which is why we chose beaten-down stocks or ones close to support levels. It worked for practically all of them, although, truth be told, it worked because practically all of them went up.
We recommended investing in Popular, Abengoa and Bankia instead of Telefónica, Santander, Inditex and Iberdrola.
Bankia
Bankia lost its support and went into free fall given the “news” that came out. If you set the stop loss where we said, the loss was 1 or 1.5%, so this stock didn’t last long in my portfolio, and we should forget about it completely until there’s fresh news.
Abengoa
Abengoa has met our expectations, rising from €1.90 to €2.65 (at today’s close). I’m keeping it in my portfolio with a trailing stop loss.
Popular
Without a doubt my most profitable investment. Today I sold a third of the shares I bought in the capital increase to lock in part of the gains. As long as the rally continues I’ll keep the rest, although we should expect the rise to pause, possibly followed by a correction that could come after a close in the red. That’s when I’d personally get rid of another third of the shares. Once the correction was over I’d buy back in because, as I said, these are shares I’d like to hold for the long term.
Summary: with these three stocks, and even with one of them going wrong (Bankia), we’ve already achieved an average return above what we described as the reasonable average annual return for an investor. Now it’s a matter of not throwing that return away. There’s no need to close positions. In cases like this, it’s best to let the market knock out our trailing stop losses one by one.
The continuous market
We recommended three stocks from the continuous market because they were at support levels: Ezentis, Deoleo and Prisa.
Grupo Prisa
Prisa lost its support, so my position was closed. That’s a mistake I sometimes make by setting the stop loss too tight, because Prisa eventually took off and today it rose more than 20%. I missed out on that.
Ezentis and Deoleo
Ezentis held the support level we pointed out. This company is a big long-term personal bet for me. I bought my first shares at €0.14, and now, whenever it drops below €0.16, I take the opportunity to add to my position. Likewise, when it gets close to €0.18 and I see it can’t break through, since that’s a major resistance level, I usually take some profits. That said, I’m not going to touch this investment this year unless something major happens.
As for Deoleo, it also held its support, and I’m keeping it for the long term too, along with Gowex, from the Mercado Alternativo Bursátil (MAB, Spain’s alternative market for smaller companies).
Finally, the other stock I still had in my portfolio was Gamesa, and given how much it has risen outside the IBEX, I’ve decided to take all my profits.
Further reading
- Does January predict how the stock market will do for the whole year?
- 10 investing mistakes
- When is the most profitable time to invest in the stock market? Some stock market curiosities
Featured image: Abengoa Solar, CC BY 1.0, via Wikimedia Commons.
