Mark Shipman, now 45 is a self taught, self-made multi-millionaire having left school at 16 in the late 70's. At the time he stayed unemployed for a considerable amount of time but was lucky to get a job in a bank. Mark started by reading investment books written by successful traders and got into futures trading where he build his fortune from backing his own judgement with his own money. He had his parents remortgage their house and borrowed from relatives - I believe he started out with around £60k.
After making a fortune in the deadly bear pits of the 1980s futures dealing rooms, he left the City to establish an investment fund for wealthy clients; Silver Knight Investment Management, which returned 20% a year from 1990 to 1996. However, he says that he found it too restrictive and ended folding it up 12 years ago. He then went into buy-to-let investing and then back to the stock market on his own account. Mark Shipman has retired twice, the last time aged 36. Now he runs trading seminars (because he enjoys teaching people he says), owns racehorses, plays poker and writes little books with big titles like: 'The Next Big Investment Boom: Learn the Secrets of Investing from a Master' and 'How to Profit from Commodities and Big Money, Little Effort. A winning strategy for Profitable Long-term investment.'
The one thing I liked about Mark Shipman was actually seeing him on the late money show and being able to judge him as much as to how he expressed himself in what he said. Mark Shipman comes across as a fairly reliable character who knows how to express himself and seems a man brimming with knowledge, astuteness, confidence and success.
Mark Shipman preaches that there is no quick-rich money-making scheme - he says that anyone who tells you that is lying. He also advocates discipline and patience and using spread betting as a tax-efficient way of trading futures in Britain and Ireland. However, Shipman warns that spread betting and futures are not for everyone - you can use futures to leverage your money but you run the risk of becoming over-committed and then you only need a small move in the market against you to wipe your account. So futures trading and spread betting are only appropriate for people who understand the risks of leverage. He says that typically successful traders are very quiet, very calm, very 'boring' - and that trading as an activity is not as exciting as everyone thinks.
'Women are better at trading than men and if you look at recent times some of the most successful traders were women. Men tend to be more aggressive, tend to want to bully the market, less likely to accept when they're wrong and cut their position - women I believe are much better at that than men - Mark Shipman'.
Mark claims to have made most of his fortune from using two very simple charting patterns, fortified with patience and discipline, to seek out trends that take a whole asset class from unloved to overpriced over multi-year periods.
Mark Shipman's system is relatively simple. He doesn't enter any position unless it satisfies his entry criteria as outlined in the book and he expects commodities to satisfy these criteria in the future - and he suspects that he will be involved in many of them over the next decade. He doesn't trade on fundamental analysis but uses technical analysis. He uses a 40 week moving average and goes long if the closing price at the end of the week is higher than all the previous 12 weeks closing prices and if the price is above the 40 week moving average (only if the 40 week moving average is rising). He then sells that long trade if the price dips below the 40 week moving average. Shipman argues that trading is primarily a psychological challenge and that once you devise a trading system you must stick to it - regardless of big losses/gains...
I have read his book and re-read it a few times. While skipping through the book again it is 150 pages of which a lot of is explaining about the different commodities as to what is soy bean, coffee and so on. He puts some basics (moving averages) of technical trading and proposes spread betting to try to beat professionals in a zero-sum game. His strategy and general comments are sound although there are elements I don't like about it. For instance, using his method you never buy a stock that dips. You only buy a stock that has a clear uptrend and with a 200 moving average that is going up...etc. So it kind of mitigates against buying what you know is an excellent company (after doing your homework), but has a short term dip...etc. Also, no doubt his system is good for grasping a solid educational discipline but it doesn't work all the time or otherwise everyone would be using it. And can a simple moving average system be a substitute for detailed research into a few stocks as in Jim Slater's Zulu Principle? - I think not.
In some ways he also seems to contradict himself. For instance, he enters positions due to technical reasons but his book is all about why commodities are good from a fundamental perspective and that commodities are in a secular bull market. Mark Shipman stated that China and India have changed the world beyond anything we have seen in the past and there is still a long way to go for commodities. But if he is so strong about fundamentals why would he stress technicalities so much and think about exiting position every week? Also, he says that there's no quick rich money making system, yet on the Times he's quoted as saying that everyone can do well by just logging on to the internet for an hour a week.
It seems that he doesn't go short on trades. He describes himself as a long-term investor and doesn't consider what he does trading; in fact he has held positions for years, for instance he held a gold position for months and months on end. It appears as if his focus is exclusively on exploiting bull markets. He also doesn't trade individual stocks very often because he says individual stocks are far less susceptible to trends than indices or commodities and also with individual stocks you are dealing with management more than anything else. In fact, I have never seen him posting any individual stock trades on his website but perhaps he can't do so as this would be seen affiliating himself with a particular stock (?). Also, he warns that his system does not work out well when markets are drifting with no clear direction.
I would be a bit skeptical from the point of view that what he is teaching is not how he made his money - if I remember correctly when he as on the late money show talking about a number of people with computers running all day in his house it doesn't match the view of a long term investor. So somehow I think he made his millions trading one way and is now just giving basic investment advice that you can find anywhere on the back of his reputation.(which isn't necessarily a bad thing if the advice is good).
Undoubtedly Mark Shipman is very well respected. I know of one investor with a seven figure portfolio who uses very similar methods to Shipman for a large portion of his investments. Shipman himself uses his system but only for about a fifth of his investment fund, and then only for indexes such as the FTSE, Dow Jones or the Nikkei.
If you wish to see his current open trades just go to his website www.trend-follower.com. He updates it every Monday afternoon with his new positions for the week. His positions don't change all that frequently as you'll see. His books are also worth a read but attending one of his seminars doesn't come exactly cheap at £700. Note that as part of the course you are also allowed continual e-mail contact with him.
Shipman's trading experience reflects in his written work. He writes in an easy-to-read style and succeeds in explaining his methods very well. I particularly found the chapters on the psychological side of speculation and the examination of past investment booms interesting.
Shipman discusses irrational markets of the past, like Tokyo's real estate boom in the 80's, the technology bubble of the 90's, and everyone's perennial favourite, tulip mania in Renaissance Holland. The book describes the three stages of any market cycle, identified by the scale of its popularity and observations of participant behaviour. Shipman's investment strategy uses 'stage analysis' as an indication of where the trend is at, how far the bull has left to run and when to put one foot in the door.
Mark Shipman advocates a long-term view of commodities much like that of Jim Rogers in "Hot Commodities", the main factors fuelling commodities price rises being increasing demand in Asia and other emerging economies, coupled with low profitability in recent years having forced many producers out of the markets. Unlike Rogers, Shipman combines long-range fundamental analysis with simple technical analysis a la Richard Donchian. Position sizing is simple: use a maximum of double margin (i.e. if the margin for a contract is $1,000 then you should have $3,000 per contract invested).
Generally, there is nothing new in the technical side of his approach as trend-following, moving averages and breakouts have been around for years (used by the Turtles for instance). However, to his credit, Shipman combines them with an interesting use of fundamental analysis to produce a logical and seemingly solid strategy.
This book is now more than 2 years old and although Mark gives some very compelling reasons as to why we are at the beginning of a boom in commodities, it appears that the commodity bubble has already burst. Oil has dropped to less than $50 a barrel from its $150 peak and gold has eased down to around $850 oz. Mark Shipman himself admitted recently that it may be betting sticking to index or ETFs rather than risking money in individual commodities as there could be further turmoil if the global economy went into recession. Perhaps the real value in reading this book is to see how a professional approaches and profits from the markets.
The author uses spread betting as a tax efficient trading vehicle but he doesn't really cover spread betting - in any case you can find a good explanation of spread betting and its workings on this site.
This is the second book written by Mark Shipman and basically it is a subset of the information/ideas presented in the first book: The Next Big Investment Boom. The book focuses on the one specific idea of using crossover of buying when the 30 moving average crosses the 50 day moving average. Probably you do not need to buy both books especially considering that 20 pages of this book are filled with the with the name of every company within the S&P500, the FTSE, the DOW etc!
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