Transcript: How To Make Money Trading Shares

Published in Investing on 4 August 2010

David Kuo talks to Robbie Burns, aka the Naked Trader.

You can listen to or download this podcast here.

 

David:

This is Money Talk, the weekly investing podcast from the Motley Fool. I'm David Kuo, and my guest today is the multi-talented Robbie Burns. Robbie has been a journalist, a writer, editor of ITV and Channel 4's teletext service. He's been a freelancer on the Independent and The Sun, and also set up a financial news service for CNN. I'm not done yet! He also helped Sky set up their shares and finances services, owned a cafe in London and set up a 'Buffy the Vampire Slayer' phone line, but he's here today to talk about the second edition of his book, 'The Naked Trader' and I'm hoping that he'll pass on some of his valuable trading tips to us. So, welcome to Money Talk.

Robbie:

Thank you David. Multi-talented, I do like the sound of that. I've done so much, no wonder I feel knackered!

David:

There is one question I have to ask you. On the front cover of your book is a very beautiful lady.

Robbie:

Yes.

David:

Is that Mrs Burns?

Robbie:

It isn't. I'm afraid Mrs Burns was a little bit too shy to do it. Unfortunately, I had to spend the whole day in my Y-fronts to do the front page of this book. That's all down to my publisher, I shan't be doing that in a hurry, it was very cold as well.

David:

I'm sure it was. I'm sure she warmed up your cockles.

Robbie:

Well actually, it was quite cold so there was a bit of a shrinkage going on but we'd probably best not go into that because I'm sure this is a family podcast.

David:

Okay. It is a family podcast! Now then, I want to have a look at some of the things you've talked about in your book. Towards the beginning of your book, you identify fifteen different types of market players and you rate them according to their chance of success in the market. Now there's a few types of characters I'd like to talk about first, the first one being Mr Penny Share or Mr PS. He just gets a 0.5 rating, a 0.5 out of 10 rating from you. Why do you think Mr Penny Share does so badly?

Robbie:

Well, I think it's the first thing people think of when they go into the market. They think if I buy a share at 0.6p, if it goes to 2p I've either doubled or trebled my money, I'm going to be a millionaire overnight, fantastic. Of course, shares are that price because generally, they're on the crap side and what they're doing is they're usually buying a bit of rubbish. Sometimes it can pay off, you do get doublers and treblers, but often what happens is they just go down. What's worse is penny share guy can't imagine he got something wrong so he hangs onto the shares forever until inevitably it goes bust.

David:

But there are some companies out there Robbie, that have built an entire business out of tipping penny shares. Now are you saying that people should or should not be looking at these penny shares?

Robbie:

I think penny shares are fine as a small part of an overall portfolio, it's fun to have a bit of a gamble with them and I do. I buy some of the very small companies, but I think what people tend to do when they come to the market is just have penny shares on their own and what can happen is four of them do badly, one of them does very well but the four of them that do badly will drag down the whole portfolio. So, I would suggest a little bit on penny shares but concentrate on good liquid shares as well in your portfolio, don't just have the pennies.

David:

So what would be your definition of a penny share then?

Robbie:

I would go with market cap really or the value because the company could actually be 10p and still be worth quite a lot. Another company could be at 10p and be worth a small amount. So, my definition is anything of a market cap with anything less that 25 million I would rate as a penny share or a company to be careful with because it's under 25 million. Also, I think investors don't realise that at under 25 million capitalisation they can be quite liquid so if they buy too many and there's a profits warning, it can be quite hard to sell them or sell the whole stock that they have.

David:

But isn't it also true Robbie that many of these penny shares represent say the oil explorers or the miners out in Africa somewhere, companies that can only raise say 10, £20 million, and yet these are the ones that strike oil. These are the ones that suddenly find a big lump of rock called a diamond and then the shares start to rocket.

Robbie:

Absolutely, and actually, in the last three months we've had some amazing differences. We've had some shares like Rockhopper (LSE: RKH) that have trebled.

David:

Correct.

Robbie:

That's the Falkland Islands one I think isn't it.

David:

It is, yes.

Robbie:

Then you had discoveries in the North Sea quite recently, but then we've had disasters just the other day, Falklands Oil & Gas (LSE: FOGL) halved I think, went from £2 to £1 in about ten seconds, people were caught out with that. So I think if you were going to buy them yes, they could double and treble but yes, they could also halve on a story that comes out overnight. I think if you're going to buy them imagine that when you put your money in half of it could suddenly disappear. If you do it with that in mind go for it for a small part of the portfolio and I certainly have done. In the book I say beware and what I'm saying about penny shares is go for them if you like, but just have it as a small part of your portfolio, don't go crackers and have a 100%. 

I've met a lot of people and a lot of investors that have the whole lot. I met one guy at a seminar two weeks ago who had his whole portfolio in 0.6 to 1p shares and he said they keep going down. I said you're just never, ever going to sell these are you? He said, 'No!' I said, 'whatever I say to you you're not going to sell them.' 'No, I'm not going to sell them,' and that was that. All I know is he's waiting for them to go up so he can email me and go, 'Ha! Showed you, shows how much you know about shares Mr!'

David:

Okay, now let's leave Mr Penny Shares to one side now. There's another character in there called a Mr Bottom Picker. Now ...

Robbie:

This is a family podcast, I did tell you at the beginning!

David:

Now some people make an entire career out of picking bottoms, and yet what you're actually sort of saying is this is not a successful strategy either, because he only gets a three out of ten. So, why does Mr Bottom Picker not do very well.

Robbie:

Okay. What Mr Bottom Picker tends to do is that he'll only buy a share if it has gone down a lot, so he thinks it's a bargain because the share has gone down so he's bottom picking. Of course, often a reason why a share has gone down is because there's been bad news or there's been a profits warning and he only feels he can buy shares when it's gone down a lot. Now, what I try and do is hop on a share that's actually an uptrend. I like to see a share with a good performance going up, so if a share's at £1 and it's gone up from 50p, I'm still happy to go and buy the share, it's doubled, if the fundamentals look good and the chart looks good I'll still buy in. A lot of investors won't do that, they'll say, 'Oh my god, it's doubled, it's gone up too high, I'm not going to touch it,' whereas in fact those are the type of shares that can just carry on going up and make you your fortune.

David:

Now the thing is, Mr Bottom Picker, his initials believe it or not are BP.

Robbie:

Oh, yes!

David:

Bottom Picker, so it's quite a coincidence that BP is also an oil company. Now some people might have said, 'Hey I could have actually jumped on BP (LSE: BP) when the shares had fallen quite significantly' and they would have seen as a result of that a rebound in BP shares making them about 30% odd overnight. So, how can that possibly be a bad strategy? I mean some people don't make 30% in a year, and yet on BP shares you could have done in a very short period of time.

Robbie:

The problem with it is people were bottom picking ... I don't know how much more I can say this, but what they're doing with BP, I think it was £7, but they were bottom picking it at £5, £5.50, £4.50 and in fact I think it bottomed out at about £3.20. So they were bottom picking it but they bottom picked it too early, and I have to say I bottom picked, I did buy some at about £3.30, £3.35 is where I got in. They're currently about £4 now I think, £4.15 I think they are today. So yes, you can bottom pick but the trouble is you end up bottom picking too far up, you don't let it go down far enough and I think you have to be very careful. The other thing with bottom pickers is they try and bottom pick and they'll keep buying in as the share goes down, they end up with tonnes of a share and it just keeps on going down, that's the trouble.

David:

Reading between the times in your book I get the impression that you are probably a Mr medium term investor, would that be correct?

Robbie:

That's right, I would sort of say I'm a hop-on, hop-off. Hop-on the share as it's going up and then hop-off as it's hopefully about to go down, so my average holding time would be roughly three months, but I'm not adverse holding for a year or two and some of my best money has come from holding shares for a year to two years. I'm happy to keep holding as long as it keeps going up. What I'll do is I'll keep going back, from time to time and I'll say to myself, 'Would I buy that share now? It's gone up a lot would I still buy it?' if the answer's yes, I'm actually liable to buy some more, so I keep hopping on the share as it goes up and when it starts to weaken I kind of start to scale out of it.

David:

Okay, now the medium term investor, yourself, gets a rating of about eight out of ten in your book so you rate yourself reasonably highly, your particular style of strategy. Now somebody else who also gets a very high rating is Mrs long-term investor, she gets and eight out ten. Now the question people must be asking is if Mrs long-term Investor gets an eight out of ten rating from you and you are putting a bit more effort into things and you also get an eight out of ten, why would we want to do what you do rather than what Mrs long-term investor does?

Robbie:

Of course, I think everyone is different. You could say have you got a job? How much time have you got? I've got lots of time, I can sit at home, I can hop on, hop off very easily. I'm sitting by my laptop all day. Some people haven't got that, some people have got a nine to five job and they can't do that. So for them, probably a couple of weeks ago, if they'd bought a few shares they'll now hold onto them until the end of the year or maybe the middle of next year. They can relax and do nothing and the money will come. Actually I think I said in the book 'Mrs' because in fact, I believe women can be better investors than men because they're more risk averse than men so they're actually likely to cut their losses quite quickly.

David:

You do realise we have a lot of male investors listening to this podcast don't you?

Robbie:

Well, I don't mind, I'll just say it as I see it.

David:

Okay.

Robbie:

So, I'm happy to say it again, women I think can be better investors than men. Sorry blokes, I think us blokes have a habit of we need to press our buttons on all our Blackberries and blueberries and whatever they are, trade a lot. We can't help it because when we go, 'Ooh, it's losing money I'm going to get out of that,' and if it's making money they start thinking, 'Oh, lots of bags and boots coming out of this,' and they'll hang on to it. Of the people I've met, I would say the women come out on top.

David:

So what about Mr safe and steady then? Mr safe and steady, you're a little disparaging about him sometimes aren't you? You think he's a little on the boring side and maybe he should have a bit more excitement in his life, yet Mr safe and steady also gets an eight out of ten from you in the book.

Robbie:

Have I given everyone eight out of ten? No, I didn't realise I'd given everybody eight out of ten.

David:

You have given everybody apart from the bottom pickers ... apart from the bottom pickers who don't rank very highly. So what do you think of Mr Safe and Steady, the guy who buys high yielding shares, who buys things like Tesco, utilities and those type of shares.

Robbie:

Well I think that's probably more of an age thing. The older you get the more important things perhaps like dividends ... when you're in your early twenties you don't really care do you, let's just bung a few quid on penny share and hope I become a millionaire. When you get to your fifties and sixties, I think it's probably more important to think I need a bit of dividend yield coming in. The way I look at dividends by the way is I like them to pay my commission costs. My portfolio is doing well I feel when my dividends are paying my costs and that's the way I look at dividends, so it pays my stamp duty and my commission costs.

David:

Now let's have a look at how you go about choosing shares that you think are suitable for trading, do you think size matters?

Robbie:

Are we going back to bottom picking here, I'm not sure.

David:

No! We are moving into that realm at the moment.

Robbie:

My wife hasn't complained so far anyway.

David:

Okay. So in terms of shares do you think size really matters?

Robbie:

The size of the share, do you mean how big ...?

David:

The size of the company.

Robbie:

The size of the company, well if you're going to have a portfolio I think it's great to have a wide scope. So I would have a couple of FTSE 100 stocks in there, some FTSE 250 stocks, some small cap stocks and a couple of ... say we were talking about the risky oilers earlier, a couple of risky oilers in there to have a complete portfolio, together with a couple of boring, safe dividend yielders too. I think that makes a very nice, attractive portfolio. But also, what people don't do, is have the occasional what I would call a short in their portfolio in having a little bit of exposure to the downside and I do that in my ISA by using something that sounds bit boring called an Exchange Traded Fund. If the FTSE goes down it makes money, if the FTSE is in a bit of a down trend I also add that into my tax free ISA to make money out of the downside so I have a little bit of exposure to that too.

David:

Something else in your book that really interested me was this thing of the traffic lights system. Can you explain to me how your traffic lights system works?

Robbie:

Absolutely fantastic, it's revolutionised my life. I read through reports and you know reports are the most boring things you can read. Companies put out these statements four times a year and they're written in the most boring of fashion. And so what I've done is I've worked out which is the words they use when a company is in trouble and one word I picked out was 'challenging' as the word they use a lot. That means, 'We're in the brown stuff, with us challenging.' So my highlighter picks out positive words, picks out negative words, but also picks but the best word of all, which is debt, and also picks out the words banking covenants, which is very important to check your company isn't going bust and also picks up the words 'pension liabilities.' So companies tend to put these very far down their reports. 

Someone like Yell (LSE: YELL), which has got a debt of something like 4 billion, if you look at the company report you'll find you can go through about most of the size of War and Peace before you actually get to where the debt is. My highlighting system picks out the debt, you can just scroll right the way down the report, there's the debt, I compare it to the profit and if it's more than three times the full year profits, 'No thanks,' and I'll move onto the next share. It usually takes me about 20 seconds to say 'no thanks' to a share and move onto the next one because I'm not interested in shares with high debt, why should I be? Why bother getting involved when there's thousands of shares with good cash or very low debt.

David:

So when these buzz words occur too regularly within a particular report then you give it a red traffic light then do you?

Robbie:

Yes, I just say it's red and move on. Debt is the biggest thing for me, that's the first thing I look at. It's a really simple system, so if a company is making a profit of 10 million, I don't want the debt to be more than 30 million so my highlighting system picks up net debt, if it's more than 30 million I say, 'Thank you, there's 3,000 shares out there, I'll move onto something with lower debt.' The reason I did that, I looked at companies that had gone bust and in each case the debt was five times or more the full year profits and in every case they'd gone bust so I thought okay, five times, let's make it three, that's working very well for me. I've never bought a share that's gone bust.

David:

But isn't debt a particularly good thing when we are in an inflationary environment. I mean if we think inflation is going to be bad as a result of what's going on around the world, the devaluation of the pound, then surely, debt is not such a bad thing to have on your books because inflation will start to shrink that debt. You borrow £1 billion and it won't feel like a billion in a few years time because inflation will just erode it away so isn't that a good thing?

Robbie:

No, I don't think so, no. I'm really happy with steering clear of the debt. I just don't want to be involved with a company that goes bust.

David:

I don't think anybody wants to be involved with a company that goes bust.

Robbie:

But you see imagine you're talking to someone that understands finance more than I do. I'm actually a really simple guy so you start talking to me about inflation and that and I'm going, 'Oh yeah!' It's above my head and I don't really care, I'm really simple. I guess you'd call it the Alan Sugar approach, what's your profit right, what's your debt, I don't want to hear about anything else, don't give me any of your rubbish, right. That's me, that's it and if I think the company looks like it's lowly rates, the profits are rising, everything looks good, dividends going up, plenty of cash, that's great. I'll give you an example of a share that nobody else would probably buy called Devro (LSE: DVO). All it does is it makes all the disgusting stuff that goes around sausages.

David:

Correct yeah, they make sausage skins, yeah.

Robbie:

And salami, and the share has doubled in the last four or five months I think but it's not the sort of thing that excites people. They want to be in the high risk oil shares, which is fair enough, it is more exciting, but Devro hasn't got any competition, the profits just rise, the dividend goes up and actually, I met a butcher who said he's doubled the amount of stuff he orders from them as well so that helps a little bit. There we are, the share doubles, you've got a lovely dividend coming in and I'll be holding that probably for another two or three years, no problem. That's the kind of share I like.

David:

Is that because of the austerity measures that are going on, so more people are doing away with the steaks and having more of the sausages.

Robbie:

They're eating more sausages, exactly yes. Actually, it's also to do with kids because parents are so lazy that they just want to put it in their kids' lunchboxes. So it's like salami, cold hams, and Devro makes ... don't look at the website because you really don't want to know, you won't eat a sausage again, honestly, if you look at the casings that go around the sausage.

David:

Let's move on swiftly to something else. We're going to have a look at charts next. Do you think that charts are quite important? Why is that?

Robbie:

Yes and no. I don't believe in Chartism that you don't look at the fundamentals and you just look at charts, and if you just look at a chart, you can tell where a share price is going. I don't really believe that's true, I think you should look at the whole picture so I believe you should look at the chart and the fundamentals and everything together, but the chart gives you the history of what's happened to the share before. I use the chart to set where I think the share might go, where I'm looking to hop on and where I'm looking to hop off, and if it starts to go down where I want to hop off and take a loss quickly because I might have made a mistake with it. 

So, I just look to see with the chart, where did it go down last and where did it recover? Who's it been hanging out with, you know, what's it been doing and then I look at the chart from there. I've never met anybody who's got rich from just looking at the charts. If you can find me one then do let me know and I'll change my mind, but I've not discovered one. In fact the only time I ever did a speech because I'm probably too lazy to do, there was a guy on before me, I was about to make a speech and he was a very well known chartist and he was effing and blinding about how badly he was doing. The next thing I know he was up on stage telling everyone how fantastic charts and how he uses them to great success so, you know, I sort of take what they say with a pinch of salt.

David:

So you don't think drawing imaginary lines on a chart will tell you where a share is going to go in the future?

David:

No, I think people are deceiving themselves and also blokes love drawing all these lines and squiggles all over the place. It gets them very excited, it just doesn't do anything for me at all, but a brief look at a chart is very handy because if I find a new share I do want to know where it's come from and how far it's gone up, how far it's gone down recently. It's nice to look at it to judge where you might want to come out because I think when you do a trade you ought to have a plan. If you plan it, if you just press the button and then buy, which a lot of blokes do because they're a bit bored, 'I'll just buy this to see ... it might go up, it's gone up a penny. Somebody on the bulletin board has tipped it so I'll just buy it,' and they've got no plan.

David:

So are you saying bulletin boards aren't useful at all?

Robbie:

They have their uses but they're a bit like a sort of pub, especially some of the worst ones where blokes who haven't met each other are fighting and they're like having little wars, little war games and they're fighting and bitching at each other. They'd probably get on really well if they were in the pub having a drink but they're just bitching and fighting. It's handy to look at just to see what's going on, and also you get people with different pin names and it's actually the same person. 'Hello Jim!' 'Oh yeah, this share's great.' 'Yeah I think this share's too,' and they're actually talking to themselves. That's all a bit bizarre isn't it so I tend to stick clear of them but it's interesting for a bit of fun, I'll take them with a pinch of salt.

David:

Okay now, the other thing you also look at is the PE ratios or the price to earnings ratio. How does that help you in deciding whether or not to buy or sell a share?

Robbie:

Well that's sort of kind of true but because all different papers publish different P/E ratio, suddenly you get historic ratio, forward ratio, big brother P/E, this, that and the other ratio, they all seem to be different so I took a very simple approach. I thought what's your four year profit, so say you make 50 million in a year, I simply times that ... For a normal company, not an oil company or property company because they're a different valuation, I usually times it by ten, which would give me a valuation of 500 million and then if it's got a net debt I lop some of the debt off, if it's got net cash I add some into the valuation, and then I see what the market cap actually is. If it's a little bit different from what I've thought, I think there's a bit of upside then I use that to calculate the share is quite cheap.

David:

So how would you describe your investing style? Is there one particular style, one particular label that you can use to describe how you buy and sell shares, are you a value investor, are you a momentum investor, what kind of investor are you?

Robbie:

I think a bit of both actually. yes, a bit of momentum, but I would say what I said earlier, hop on, hop off, a bit like the old bus, you know.

David:

H-O-H-O investor, Hoho investor!

Robbie:

That sounds good, let's invent a new type of investor, that would be good.

David:

A Hoho investor!

Robbie:

I'm not really much of a short-term but I mean I do a little bit of a short-term, I do a little bit of indices. I bought the FTSE indices recently because it was a bit low, but I also do a bit of shorting as well so I'm into when the trend is down to make money out of shares going down. I run my own pension so I particularly like doing that using something called a covered warrant. If the FTSE has gone down 2%, it goes up 10 or 12%. Another boring word, hedging, but it hedges my ... It means if the FTSE is in a short-term down trend, which is was recently, instead of selling my stock, if I think Devro is fantastic but it might go down 10p just because everybody's panicking and selling everything, I'll simply take a short out from the FTSE so that balances out, makes some money on the short, the longs go down but then once the FTSE starts going up again the longs go up again, I've still got them, I'm still in my profit, I cancel out the short, take the profit on that and everything's going up again. The person I model myself on is Mr Spock, unemotional, it's business, a lot of people sort of ...

David:

Which Mr Spock are you talking about, the one from Star Trek?

Robbie:

Star Trek, is there another one?

David:

The other one is Dr Spock instead of Mr Spock, yes. Think of me as a Mr Sulu!

Robbie:

Yes okay, yeah so you've got to be cool captain, you've got to be logical and you've got to treat it as a business and what people do is fall in love with the share and they get obsessed with one or two shares and they keep buying the same share and screwing up with the same shares time and time again. So if I ever make a big loss on a share, I simply take it off my monitor, I never go back to it again because it's emotional, you have feelings of revenge. You think, 'Right, I've lost money on that share, I'm going to get my money back.' I'll just take it off and start again. The worst share I ever bought, which I lost eight grand on, is share called Coffee Republic; I bought it because I like the coffee. No, not a good reason to buy a share. 

I got obsessed with it, I started going to my local branch and I told them to put their muffins on top of the ... because that's where the margin is, 'What are you playing at?' and then they obviously thought I was the local looney. I could see them disappearing as soon as I came around the corner, 'God, it's that looney coming around, let's get out, let's get out the coffee shop,' and I sold them ... Also, I was getting these terrible caffeine highs, I couldn't sleep at night, so a great, lesson. I bought at 28p and sold at 3p, made all the mistakes, averaging down, which is another mistake people make, which is buying a rubbish share and buying more of a rubbish share because you're convinced you were right in the first place and that was my worst disaster.

David:

So how long does it take, roughly, for somebody to be a good investor like yourself? I mean how many years of experience do you think somebody needs before they can say yes, I think I'm actually quite a good investor, I can pick stocks.

Robbie:

It's very difficult to say because it depends on if somebody's got a nine to five job and they can't access the internet, it's going to be much harder for them. Somebody who decides 'I'm going to do this,' they've only got a part time job and they've got time to do it and look at it and study it, but I think people think they can go in without doing the work and researching shares properly. I think you've got to do your research. They think they're going to go in and make their millions and I just doesn't happen.

David:

Are you prepared to make a prediction as to where the FTSE will be at the end of this year?

Robbie:

No, I don't make predictions.

David:

Have a try.

Robbie:

Do you know what, a very good source told me today, it could be up a high as 7,000 by the end of the year, there's this really good internet guru that ...

David:

Let's move on swiftly to something else. This is a question that people always ask me to ask me to ask our guests on the podcast and that is the Motley Fool is very good at telling people how to go and buy shares, but they never ask people when should they sell a share, because otherwise you'll just end up with more and more shares in your portfolio. So, what is your strategy for selling a share?

Robbie:

Okay, whenever I make a trade I have a target price. When it gets to that target price I look at it again and I go, 'is this share still value or is it looking like it's topping out?' If I think it looks like it's topping out my immediate thing is to sell half. So I don't sell the whole lot, I scale out so I'll sell half, or maybe even a quarter, take a bit of profit off the table. If I come back into it and if got to the target and it still looks great value, maybe another good report's come out, I'll actually buy some more. So I tend to have ... my portfolio will tend to be probably seven or eight shares with quite a lot in those shares because they keep on ... like I say, Devro for example, I've now collected quite a few, but say for example, in the next report from Devro there's a bit of a question mark. 

As soon as a bit of question mark comes up then I'll star to sell because I'll think, 'Mm, something's going slightly wrong here, they're not quite as bullish or ...' My little traffic light system starts flashing up red words, then I'll sell. If everything ... if the garden still looks rosy, I'll carry on. There's another one I've had recently called Dialight (LSE: DIA), I bought that at 140, it's now 340 I think, LED lighting, it's going to be big. Governments need LED lighting because it cuts all their costs, all the governments are looking to cut costs and they've got some very nice deals for traffic lights in the States. So literally, I've just kept adding all the way, I bought at 150, 180, 220, 250, 280. I've bought at, I think they're 330, 340 now, so I've doubled my money in half. I now have about 40 grand's worth but I'm still happy to hold, but if in two month's time Dialight suddenly said, 'Oh we haven't really won any contracts and actually things aren't going quite so well,' a couple of red words pop up, I'll start to sell. So that's how I look at it.

David:

But isn't it also true that sometimes companies are just perennial companies because they just continually go on making more and more profits, year after year, so you have a company like say Unilever (LSE: ULVR). Ten years ago it was okay and then during the intervening period it had a bit of a blip, a lot of people would have taken your advice and said there's some buzz words in there that I don't particularly like, I'll sell, but then they'll look back now and say, 'Maybe I should have sold in the first place.'

Robbie:

That's okay, you can just buy them back.

David:

Life goes on in other words.

Robbie:

It's absolutely fine, but there's plenty of lovely shares around that people ... another great one is Aggreko (LSE: AGK), you know.

David:

Correct yeah.

Robbie:

I got that at £5, it's now I think £16 today, supplies power to South Africa, I think it supplied the World Cup.

David:

They did, yes, temporary power.

Robbie:

The Olympics, if you saw the World Cup you've probably seen an advert for them on the side, I think Aggreko was on the adverts on the side of the football pitch. Fantastic company, I've made an absolute fortune no them. I've got some spread backs on them too. It just keeps going up, it has the odd blip, sometimes it goes down, 40 or 50p.

David;

But that doesn't worry you ? I mean the World Cup only comes around once every four years, we're not going to get a World Cup next year.

Robbie:

No but if you research it you'll see their market is just growing and growing, they've go markets all over the world and as the years go by, power, if you research it properly you'll find that even in this country they're talking about four or five years time we might be struggling here and think power, especially in places like India, there's a couple of other shares, I think one's called SR. I think that could be the next big thing, I think Aggreko have still got a way to go and I expect to be hanging on to that until it gets to about £25. A lot of investors won't buy shares at 14 or £15, they think they're too expensive. I don't agree with that.

David:

Just buy a fewer shares.

Robbie:

Precisely yes, exactly. It's not going to be like the penny share where you going to suddenly buy a million shares, but just have a few and hold it.

David:

It just feels better when you actually say, 'I'm putting an order for 100,000 shares.'

Robbie:

People love that don't they, I'm not going to just buy 50 shares, what do you think I am, some kind of cheapskate? There's lots of lovely shares out there, for some reason widely ignored by investors at home and I've no idea why. I think part of it is they want to be part of some exciting small oil play, which I said is great if it's a small part of your portfolio, be careful. Be careful out there folks.

David:

I like the Hill Street Blues! Thank you for coming into today Robbie, it's been an absolute delight talking to you, but before you go, I know you have a copy of your book here, which we want to give away to a lucky listener and you have the question there for us, so would you mind reading it out for us please?

Robbie:

Yes, of course. I set up the information phone lines for Buffy the Vampire Slayer, can you tell me who played the character 'Buffy Summers' for a chance to win an exciting signed copy of my book, 'The Naked Trader.' So email your answers to moneytalk@fool.co.uk

David:

I would enter that competition.

Robbie:

I'd enter it now. Can I have this one by the way?

David:

I tell you what, if the prize was a date with Buffy, I would certainly enter the competition.

Robbie:

You nearly said her name then didn't you, you nearly said her name!

David:

Yeah I did, yes. Now thank you very much for coming in today. Now you may not know this but I end each podcast with a quote, and today's quote comes from Milton Berle and he said, 'If opportunity does not knock, build yourself a door!' That's what Milton Berle said. Now thank you very much for coming in today Robbie.

Robbie:

Thank you David.

David:

I wish you every success with the second edition of your book, 'The Naked Trader'.

So this has been MoneyTalk, I have been David Kuo and my guest has been Robbie Burns, author of 'The Naked Trader'. If you have a comment about today's show, you can post it on the MoneyTalk blog, which you can find at fool.co.uk/podcast and if you have a suggestion for future shows you can email me at moneytalk@fool.co.uk.

Until next week everybody, happy investing!

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

sjhfool 05 Aug 2010 , 8:49am

(??? 7:52) = "back"

mcturra2000 05 Aug 2010 , 1:21pm

Interesting article. There seems to be quite a lot of evidence to suggest that women are better investors than women; although curiosuly, all the greats are men.

TMFTigger 05 Aug 2010 , 2:52pm

Thanks sjhfool. Missed that when editing this yesterday.

RobinnBanks 08 Aug 2010 , 3:35pm

Robbie's first book is great, well worth reading, and no doubt the new edition will be too. Quite agree about Aggreko - good interview.

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