Monthly Archives: September 2015

I’m trying a new policy of blogging every trade in the Obliquity Portfolios before they happen. I usually can’t be bothered after the event, and writing things down helps keep a record and concentrate thoughts, and possibly avoid extraneous trading.

Talking of which, let’s start with a news trade today, selling Volkswagen. See the press for the fiasco regarding software hacks used to fake US environmental testing. This is a bit late closing the the stable doors after the horse has bolted, but I also have some long term rationale:

  • I’m in a slow tidying up process away from non-UK/US stocks in Obliquity London due to costs
  • Volkswagen breaks my family/close control portfolio rules
  • It remains a good brand but I have some doubt about their world domination plans, they may be trying too hard

On the actual current news, it’s hard to price. The raw cost of the regulatory proceedings are likely to be smaller than the headline maximum figure, which is what the market seems to have priced. The fine may be lower, but the reputational damage may be worse, even if it turns out it was just a rogue middle management initiative. If it’s symptomatic of a more widespread culture, the downside is increased even more. On the other hand it could well be forgotten in six months after profuse apologies.

From a market psychology viewpoint, uncertainty tends to depress the price for a long time, and inertia is such that bad news tends to take some time to be absorbed, so it’ll probably get worse before it gets better.

One amusing thing is that the CEO hasn’t resigned yet. I’d be surprised if he’s still there by the weekend. Even if he did not authorise it, I can’t see how he could survive that.

I’m a bit tempted by FIAT Chrysler as a replacement but the US listing is not tradable in this UK account and the Milan one has the cost issues, so will skip that for the time being.

Edit: given the huge moves during that day I’ll add that my price was a fortuitous €125.