I don't know how many psychologists are at work in the UAE, or what proportion of them read The National, but however many there are, this one's for you, guys. Don't get me wrong; I'm not looking for a label, but some insight into the way my brain ticks might help me to understand where I'm going wrong in the day-trading game. Oh, sure, I've made some pretend money, more by luck than skill, but ever since I decided last week that it was time to shake up my game, sell what had become my single remaining stock and buy into some new holdings, I have been unable to act.
Now is definitely the time to sell Old Mutual. It has risen like the summer temperature in the UAE and, just as inevitably, it is bound to start falling again very soon. In fact, after several weeks of doing nothing but climb, for the past week this stock has barely held its own, trembling like a roller-coaster car that has reached the highest point on the track and is about to tip over into free-fall.
With a ceiling of only £15,000 (Dh85,675) in my practice account, plus the £1,500 or so I have made since June, liquifying all or part of my single asset is a necessary first step to branching out into fresh equities, yet every time I have logged on I have been unable to do the deed. And here's the thing, doc. I think I have fallen in love with an equity. I blame my mother. Disinterested single parent, boarding school from seven, a different "home" every school holiday. Perhaps as a consequence I have always had an emotional weakness for places (their defining virtue being that they will always be there) and inanimate objects (which, again by definition, are incapable of letting one down).
Let's just say that, if my charming Dubai Marina apartment ever caught fire (unlikely, as I neither smoke nor cook), the only things other than my passport, wallet and laptop I would grab on the way out would be Forty-Eight, the small noddy dog that sits on my desk, nodding his approval at every word I type, and my small collection of pebbles from the starkly beautiful beach at Aldeburgh on the east coast of England.
All of this irrational stuff, of course, we learn as children, as the title of a paper presented to the International Conference on Infant Studies in Kyoto, Japan, in 2006 made clear. Psychologists wanted to know whether a group of four year olds who were attached to "comfort" objects, such as blankets and toys, were attached to the unique object, or would be happy with one just like it. When they substituted exact copies, they reported in the paper: "Children treat infant transitional objects as irreplaceable possessions." The kids weren't fooled, revealing "the early emergence of sentimental reasoning ... an early and spontaneous example of the same value that adults place on sentimental possessions".
Any old nodding dog, in other words, will not do. So now, I hope, you will understand the anxiety I feel having just sold every single one of my 11,931 Old Mutual shares, leaving me with £16,451.68 to reinvest (minus commission and stamp duty for each purchase I make, of course). Emotional attachment aside, I did well out of Old Mutual. Since July 20, this stock had risen more than 24 per cent, from 111 pence a share to 138p. The trick now is going to be replacing it - and not looking back wistfully to see how it is getting on without me.
With shares, the rules have to be the same as for ex-girlfriends: no Google stalking. What now? Well, for a change, I have done some homework before charging in. My Share Centre account comes with some interesting features, few of which I have yet explored. Up till now, I have just picked stocks on the basis of gut feeling, one newspaper headline or because they have a funny-sounding name (ah, good times, Reckitt Benckiser), but now it's time to put such childishness behind me.
For the past week, I have been using a function that allows me to track the progress of shares before deciding whether to buy them, and I have had my electronic eye on four players from the same sector as Old Mutual (be still my beating heart): insurance. The thinking is this. Like Old Mutual, all four have been climbing, so there is clearly something afoot in the sector. Unlike Old Mutual, however, all four have been less volatile and, looking at their charts, appear to be in an earlier phase of the "up" part of the cycle, with much of their gain potentially still ahead of them.
And I'm listening to what the brokers say - another function available to the online Share Centre investor - about Aviva, Legal & General, Prudential and Standard Life. The first three are no-brainers, scoring 14-0, 10-1 and 11-0 on a buy-sell rating. Standard Life, however, is the odd one out, with just one broker recommending buy, one sell and 11 sitting on the fence, but I think I know why. A new chief executive took over this month and one of his first acts was to announce hundreds of redundancies - about 5 per cent of the workforce, mainly in the UK - but this is no sinking ship. David Nish has been brought in to "transform Standard Life to deliver its growth ambitions" and the other side to the cost-management coin is a £200 million investment drive.
And so in I go, spending £4,000 on each - apart from Standard Life, in which I am investing £4,300. Not because I want to put my money where my mouth is, but to avoid the revealing symmetry. If there ARE any psychologists reading this, I wouldn't want them to think I was OCD as well as the other thing. And Forty-Eight approves. @Email:jgornall@thenational.ae
