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Kamikaze for Income – Yes Really!

August 23, 2023

First find your hot stock and then it’s Kamikaze time.

Incidentally you can do this in tandem with a regular Kamikaze strategy on the same stock. Indeed it could be used to help fund that self-same Kamikaze strategy.

Just as an aside something extraordinary may be happening to rents.

I had Savills in to value my house in Saffron Walden to sell or to rent. We quickly agreed to forget about sales when I told Savills how much it would take to make me even think of selling, even though I recently turned down an unsolicited offer very close to that figure.

So then the rental lady told me how much she thought the place could rent for. My jaw went through the floor and I had to ask her to clarify the figure. For a moment I thought I had been wildly optimistic and this was the annual figure but it was indeed monthly. Her figure was double what I was expecting, even treble the low end. How are you going to find anybody in Saffron Walden to pay that much, I asked? You probably won’t, she replied, but there is an incredible amount of money sloshing around in London and Cambridge and that is where your market will be. For somebody who wants a house like this there is very little choice so they expect to pay.

I could see that. The house ticks so many boxes. It’s huge, so complicated that you can literally get lost, Georgian, the walled garden is nearly half an acre , it has plenty of parking, it is right in the middle of one of Britain’s oldest and prettiest market towns, two minutes from the market square and within easy reach of both London and Cambridge. It has views of the castle, the common, the town and the church. Rent this place and not only do you get a fabulous family home but it is a bit like wearing a Rolex watch, you make a statement about yourself (shameful I know but some of us are not only into this shallow stuff but prepared to admit it). And it’s hidden. You don’t even know it’s there until you head down the drive and see this massive place with its stable block and wildly overgrown garden stretching for ever. Living here makes me think of Miss Havisham in Great Expectations. The bad news is that I am Miss Havisham in this storyline.

Now you know why I don’t want to sell (it’s such a one-off that nobody knows what it is worth and it is not all good news; something as simple as a patio needs planning permission and is going to cost £100,000+) but also that in this market, renting, not selling is the way to maximise your returns. How ironic that landlords are quitting the market in droves.

Even so I will only believe the rental figure when I have a fat, crisp bundle of notes in my sweaty hand.

Now for the details of my new Kamikaze strategy, which I think could be amazing.

Just as yet another aside there is a two page piece in the Daily Telegraph on Nvidia’s H100 chip. Apparently the supply of chips is being overwhelmed by demand.

Kamikaze for Income

You can do this with any stock, ideally we need something volatile but with super-strong underlying fundamentals and a great long-term chart.

You buy some in a spread betting account for a long-term strategy which may or may not be Kamikaze. Next, you buy some in another SB account. This could be any amount. Let’s say you do this with $1,000 or even less because we are in beta on this strategy and don’t want to go mad.

I was discussing it with a friend, a lady even older than me. When I proposed putting $1,000 into the account to buy $5,000 worth of shares she looked at me in horror. “That’s not going to do anything. I want to buy $100,000 worth of shares.” “OK”, I said, “but I am not taking responsibility for this and you realise that if the shares fall 20pc you will lose all your money (the $20,000 of equity needed to buy/ bet on $100,000 of shares) or have to invest a significant additional sum to hold your position and suddenly this is all getting very serious. Start small; you will be surprised how fast it gets interesting.”

At first I imagined that the target was to double your initial investment but it is more interesting than that because every time you top up the fund you increase the amount of equity which needs to be doubled (see below for more on how this works). The effect is that you are chasing your tail and the shares need to go up sharply to trigger a sale. The likelihood therefore is that you will sell when the shares are overbought which is just when you do want to sell.

I am trying it so I hope to find out more about how it works. I suspect because of the constant activity, buying more when a rising share price creates additional equity and adding funds on margin calls that even a small initial investment – £250 buys £1250 – could grow rapidly into an interesting amount.

Strategy – Make Investing a Game

Imagine, like my friend, that you have six figure sums earning interest but you want to have some fun and make some extra money. Then you can play my Kamikaze (KZ) for income game or play both, KZ for income and KZ for capital. If you are playing with say £250 in the income account and whatever, say £1,000 or any multiple, in the buy and hold account then you should be (a) stress free and (b) able to buy on all the signals on the income account.

Big Day for Nvidia

Today is a big day for Nvidia with the much awaited Q2 results due after Wall Street closes today. It will be astonishing if they are not good (sales over $11bn) but even if they are good and the guidance is strong the shares may react because of the expectations riding on the stock.

The important thing is that Nvidia’s contention that demand for AI chips and associated software is taking off should be supported by the results and the accompanying statement. If that is the case then the shares are a firm hold and a buy on weakness.

Nvidia is very much the centre of attention and that worries many investors but Microsoft was the centre of attention in the 1980s and 1990s and that did not stop the shares from rising and delivering incredible returns to people who bought and never sold.

The thing to remember is that shares can be very volatile in the short run but will do fine as long as the story remains intact.

Share Recommendations

Nvidia NVDA Buy @ $470

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