Author of the bestselling book 'The Naked Trader', Robbie Burns says he should prosper with a New Year investment portfolio. Here he lays bare his market plan:
My investment strategy has always been quite simple: find excellent companies and hold them until the value comes out. Then, find companies with huge debt and 'short' them. That is, try to make money on a sinking share price. It means I can profit if the markets go up or down.
So, if I was coming into the market afresh for 2010 with £35,000, what would I do with it?
The largest amount, £20,000, would go directly into shares, with as much as possible invested in an ISA (Individual Savings Account) to avoid tax. From the beginning of the next tax year, £10,200 is allowable into self-select ISAs.
I would buy up companies which have delivered a resilient performance during the recession, have growth prospects, low debt or cash and pay a good dividend to produce a yield.
With banks likely to continue to pay a tiny interest rate during 2010, any share producing a yield of more than 5 per cent must be worth a look.
Telecom Plus produces a yield of 7 per cent, so £4,000 would be placed here. The company uses distributors to sell gas, electricity and telecoms, all on one bill. This makes it defensive too. The big dividend should support the share price. I am looking for 20 per cent growth as well as a fat dividend.
Another good dividend play is Hilton Food Group, paying near 5 per cent. It supplies cooked-meat products to big names across Europe and is growing nicely, winning contracts. £3,000 would go here. I think 25 to 30 per cent increase in value is possible.
I would put a further £3,000 into Bioquell. This is a small but growing company which specialises in decontamination services for places like hospitals. Profits are increasing and it has cash in the bank. Great prospects here for major growth in 2010. I am hoping for a 50 per cent increase.
The healthcare group Axis-Shield seems to be growing good profits and its desktop Afinion system, which taps into the growing market for cholesterol-busting drugs, is selling well. I would invest £5,000 for what I hope would be a 40 per cent return or more.
I am a great believer in adding money into shares I already own. I made a good amount on Dialight in 2009 and I have recently bought more; so I would put £3,000 into this. The company supplies LED lighting and is winning orders in the United States. I would target a 50 per cent return.
For a small gamble, £2,000 would go into Portrait, which has an interesting market in targeting the 'right' customer for companies and has just turned a profit with nearly 2m in cash. I am aiming to double my money here.
I would put £5,000 into a spread betting account to enable me to 'go short', that is, to bet on shares in some companies to go down. For example, I would like to bet on the price of plumbing and building material distributors Wolseley to fall. I could simply 'sell' the Wolseley share price at say £5 per point. Every 1 point drop in the share price would earn me a £5 profit. I would target a 200-point drop in the price to earn me £1,000.
I would keep £5,000 aside to use ETFs (Exchange Traded Funds) to play a rising or falling FTSE 100 Index.
Another £5,000 would go into a CFD (Contract for Difference) direct market access account to enable me to bypass market makers for shorter-term trades as a great price.
I believe my strategies would earn me at least £10,000 profit, or around 30 per cent, in 2010. I would be happy with that return and pretty confident of achieving it.
