Grindernote#3 Should Stockopedia and SharePad educational articles hide behind a paywall?

always find it difficult to start writing a blog post, and this one is particularly difficult in that last night I carried out a bit of a twitter storm. The target was Phil Oakley @PhilJOakley. He is a highly respected author, writer and educator to the private investor. In my opinion, he is one of the best and someone I highly admire. Phil used to write educational articles for the owners of Sharescope and SharePad. They were free for everyone to read, learn and enjoy. Phil has now moved to Investor’s Chronicles, as an associate editor of the popular subscription-based stock tipping service. Last night though I saddened Phil with my tweets. Having read back at them this morning, I regret the way I put my point across. He didn’t deserve that.

Phil if you read this I would like to say that you are a complete gentleman in your response and while I want to express my view; I am sorry to you in the way that I carried this out. I do wish you well at Investor’s Chronicles, and it is warming to know that subscribers will benefit from the quality of your educational articles.

What the tweets storm did do however is open up a reasonable debate about whether the educational content provided by Stockopedia and SharePad should be free to everyone or should go behind the subscriber based paywall. One Twitter user even went as far as asking Tim Clarke, @T1mClarke to put this content behind the paywall, believing the subscribers are subsidising this free content. I note that Phil’s view appears to be the same.
I don’t share this view.

In amongst all the subscription-based services from stock picking tipping magazines (Investor’s Chronicles) to personal blogs (, I believe there are two services which are the most useful to the private investor; SharePad and Stockopedia. Taking out a subscription to one of these tools is all a private investor needs to reduce the noise and focus on what works. However, I accept that both these tools to start with seem a little daunting to use until you get used to them. Both websites are full of educational articles that promote successful rules-based criteria in stock picking. They not only train the subscriber on how to use the tools provided to them but also focus on the psychology behind investing in the stock market. These tools teach us to become disciplined, productive and successful investors. They do not tip or blindly encourage us to buy or sell anything. What these tools do is guide us through the process of identifying a list of shares that may do well as a whole. We learn to Stockpick without the help of tipping services. We learn how and why a particular stock may be worth investing. We learn it is our choice, that our decision may go wrong, but we understand our strategy will benefit in the long term. Subscription based stock tipping websites do not do this; some give an example of an investors strategy, but their attempt doesn’t come as close to what Stockopedia or SharePad can provide.

Stockopedia is the most vibrant and has a community of some of the best private investors willing to share their knowledge for free. They all have one thing in common. The promotion of rules based criteria on helping navigate the stock market.

Stockopedia have a few authors who write educational articles on its behalf. SharePad has two prominent writers. These authors articles are free to the general public, and i strongly believe that this should remain the case. It is part of the marketing campaign to promote the services and tools of SharePad and Stockopedia. The writers often show and encourage the non-subscribers of the benefits of using these tools. Anything that navigates private investors away from stock picking services and bulletin boards where they may blindly follow tips without really understanding what they are doing towards SharePad or Stockopedia can only be a good thing.

What I have also come to realise that many of these writers want to share their knowledge with the vast public. They are still being paid to do this. As I subscriber I do not feel disadvantaged at all that the experience shared by these writers benefit everyone who reads their articles.

Let’s encourage everyone to find a strategy that they understand, can use tools to help achieve these goals and promote the sharing of all our experiences and knowledge.

Grindernote#2 – Level 2, Football match on steroid

Grindernotes will be small rough and ready posts that will be separate from the educational type articles that I hope to type in the future. They are off the cuff opinions, maybe a bit of a ramble. But if I want to get something off my chest then Grindernotes will be the place.

I have from time to time been asked whether it is worth subscribing to Level 2. I have also seen the same question asked on the ADVFN and LSE bulletin boards from the main high-risk penny stocks. One observation I have found over the years is that it is often those who have gambled their investment on a crap resources stock and the price has tumbled that then ask about Level 2. Bulletin board users often post that market makers are playing unfair games on the private investors. The ones who have not yet subscribed to Level 2 think they are missing out on vital information and are at some sort of disadvantage.

Let’s get one thing straight first of all. Level 2 is not the answer to your failure to invest properly. In fact, Level 1 will not even help you and it doesn’t matter what the suppliers of these live prices say.

88E Example – Home Win! (for about a few seconds – minutes – hours)

Below is a screenshot of 88E Level 2. This version of Level 2 is called SEAQ, a market maker quoted screen for these types of crappy penny shares that bulletin boards love. To me there are only two bits of useful information here. The Spread (Sprd %) shown on the little quote info table on the right. It’s a whopping 5.9%. So if you buy now you’re losing a whopping 5.9% to spread.

The second useful piece of information is the yellow bar. On the left (buy side) you see the number 3 and the number 900,000. That means that there are 3 market makers willing to buy off of you a total of 900,000 shares at the current price of 1.60p. (In the dark blue section below you see the three markets makers CNKS, PEELS & SCAP quoting 300,000 each). On the right side, (the sell side) of the yellow bar you see the number 1 and 300,000. This means that there is 1 market maker willing to sell you up to 300,000 shares at 1.70p. So in theory what this means is that there is a higher chance of the 1 market maker selling to you the 300,000 shares at 1.70p BEFORE the 3 market makers are able to find buyers for a total of 900,000 shares. So in theory, once the sell order of 300,000 is cleared the price will be quoted at the next price listed which is 1.75p. This is the second set of market makers (CFEP, WINS, SCAP) in the light blue section of the sell orders.

Ok still with me? That’s cool ok so the 300,000 shares at 1.70p has been sold and a new quote on the sell order of the yellow bar is now 1.75p, 300 000 and the number 3. The spread between the buy and sell price is now widened, so automatically the market makers on the buy side now will raise the price to (perhaps) 1.65p closing the spread again. What has happened is the mid-price of the stock has risen 5p to 1.70p.

Treating the yellow bar like a football match you can see that if the numbers on the yellow side are higher. It’s a home win.. meaning you are in luck. It is better to buy in NOW before the 300 00 sell order is cleared and you have a good chance the price will rise!

What a load of tosh it all is…
See the trades on the right side of the screenshot? There are past trades at 1 million, 500000, 200000 … some sells and some buys. All I can tell from this is that the yellow bar indicator is pretty damn useless since it seems that 900,000 or 300,000 shares can easily be bought or sold at any moment. There is absolutely no way to know in which direction the price is going to move. None, zilch, zero. Look at the times of the trades too. The quoted screen may only be valid for a few minutes before it changes. There is absolutely no advantage to watching this screen and even if there was, it is only valid for a few minutes. It cannot predict the future going on hours, days, weeks. To Level 2 has much use as a 5 minute chart. It’s all noise, gives us false signals and false confidence and just confuses the hell out of everyone.

Vodafone Level 2 – A football match on steroids.
Check out this short 30-second clip. It’s Vodafone level 2 in action. This type of level 2 is called SETS.

Which side will win!

I use Level 2 but very very rarely and only to check the most illiquid of stocks spread, check volume and if there is a huge gap on buy and sell orders. Then maybe, just maybe I may buy in. But in all honestly I feel even for me that it is a waste of money, I don’t need it and it is old technology that no longer gives any advantage to investors. It is such a short-term view that if I want to invest in an illiquid stock ill just buy in no matter what level 2 says. Even for traders who may put in a market order to hopefully find a buyer/seller within the spread, it isn’t the golden grail to make them rich.

Save the money on level 2 and instead subscribe to SharePad or Stockopedia and learn to improve your investing through fundamental analysis rather than waste it level 2.

Grindernote#1 – Feb 18 Market Sell off.

Grindernotes will be small rough and ready posts that will be separate from the educational type articles that I hope to type in the future. They are off the cuff opinions, maybe a bit of a ramble. But if I want to get something off my chest then Grindernotes will be the place.

The market sell-off.

So this past week or so we have had all the main indices fall from their all-time highs. In the past month, the Dow Jones has dropped 1.54%, FTSE100 5.8%, NASDAQ 100 1.42%. None of it looks pretty with the biggest falls happening this week. Most of our holdings have been in the red intraday and there have been lively debates on twitter on how to react to these events where I have disagreed with some influential private investors. Here are some of the claims that I have disagreed with.

Trader or Investor and never the twain shall meet.
I shall be revisiting this old chestnut of an argument at some point in a decent article. In summary, though the distinction between the two has become blurred as technology, easy access to information overflow and charts is now standard for most of us. The old-fashioned ‘investor’ type would spend hours, weeks, months researching a particular business, wanting to find out everything about it; convinced of course that this will lead to better investing decisions. They buy in taking a stake, wanting to support the business and have their long-term views. They fall into the danger of loving the stock. Prices movement don’t really matter. If the price rises these investors are superheroes with ‘I told you so’ characteristics. If the price falls.. ‘hey so what.. I’m buying more for cheaper!’ even though they could be plus 50% at paper losses.
Traders – the short term activists on price action. Charts, signals, indicators – all now made easy with today’s live prices technology. They never cared about the story, trading updates, fundamentals. Ah, but they do! I know the best traders check out news statements and company fundamentals because it does affect their trade!

Also back to Investors, many care about the share price movements stretching back a few days for some sort of entry level to a few years to see how the market has taken to historic news. Many of today’s investors use trader tools and charts to determine if the markets agree with the unlimited time they have spent researching and convincing themselves of the wonderful business to which they have bought shares. Shrewd Investors care for share price movements especially when they fall and continue to ask/challenge their own opinions.

Today’s investors only need to pick a few simple rules to make money. Tools like SharePad and Stockopedia allow and have proven that picking a StockRank system, or using powerful SharePad filter criteria to find stocks based on simple rules allow for a good selection of stocks to invest in.

Please don’t tell me that people who use Ed Croft Naps portfolio type rules are not investors because they have not fully researched. Please don’t tell me they are not investors because they improve the chances of filtering out the weaker stocks that have fallen by using stop losses.

In a market, sell-off stops don’t matter because I have invested in a portfolio of wonderful stocks and they are all now cheaper.
Goes along with the overconfidence seen with many investors. They have to be correct! So even on a market sell-off, they don’t take the opportunity to review their holdings and admit that they might be holding onto some duds that the sell-off has hit the stock hard.

Selling out is expensive! You miss the dividends and you have no stocks when the market rebounds!
Another claim for me which is a load of tosh. When I take an initial position I usually start small. I have done some research but always mindful of the danger of overconfidence I’ll place a stop loss. On a market sell-off, these are the first to get hit! That’s fine. I haven’t made that much money from them. I didn’t know the business that well, and I can decide after the sell-off to look again to see if it is worth buying back into. Holdings that had gone up 10% – 30% or so may be stopped out. I look at the length of time I have held onto them and revisit why I originally bought into and consider price action over the term of the holdings to see if my original purchase was the right decision. I’m usually breakeven if stopped out on these stocks. Transaction fees are my biggest costs here. But who cares! I have protected capital and not allowed the losses to happens! The longer-term holdings are far away from breakeven stop losses. They have withstood the market sell-off. I also have probably held onto them over a long period of time. I have become to understand the business better and my confidence in the business may be real. I am still mindful of overconfidence. In this situation, I may add to the holdings. However, I usually add when the price hits highs again.

Here is one of the only claims that I have heard which I agree with.

The market sell-off might turn into a full-blown bear market.
Ah not to worry Investors. I’m sure the huge losses you’re sitting onto with all those stocks you’re in love with will eventually (years maybe) turn profitable for you.

In the meantime, I’ll show you a very simple example of overconfidence… Utilitywise down 80% on this 2-year chart (and currently suspended).

A new focus – GrindertraderUK

Welcome to my website and this my first blog post. I am an amateur investor, trader and ‘evil’ shorter of the UK stock market. Over the years I have had my successes and disasters learning from past mistakes and listening to others. As many people will be aware I used to run a previous blogging website that gave a good insight into my investing styles and included some of my trades, educational videos and spreadsheets that I used. I decided to stop running the website and deleted all my work. I deeply regret doing that and realised that there were many people who mentioned that they liked my articles.

My new website will focus on what is close to my heart and that is SIMPLICITY. Investing in the stock market isn’t hard and anyone can do it. The problem is that we all make it complicated. I fall into the trap of allowing my simple investing rules to slip. My main weakness is subscribing to far too much-investing platforms, magazines and websites. Many of these subscriber platforms are credible sources of educational articles, tips, hints, opinions and there to help private investors; we can suffer from too much information that diverts me from my main keep it all simple.

As I rebuild this website I hope to show anyone with interest in my stock picking strategy, my simple rules and the platforms.

This will take some time to do and I shall not rush out my articles like I used to do as to avoid burn out. I want this website to help and hope others will enjoy.

In the meantime, I want to ask a favour from all of you. Can you all stop for a few minutes at some point today and just ask yourself this simple question and try to answer it in one short sentence.

What causes a share price to rise?

Finally, I’ll link you to an old post which I wrote on Stockopedia about my writing style and why simplicity is important.