Defensive Buying

Monday, 12th December 2016 14:57 - by Moosh

Before we begin the new year of 2017 I would like to introduce the concept of defensive buying, and for this I will focus initially on two companies – Orosur Mining (OMI) and Oxford Pharmascience (OXP).

Defensive buys are designed to be small in size for a long term hold – how I calculate the number of shares that make up a defensive buy will remain a top secret but I will say that I personally embrace the idea of defensive buying so if you see small sized trades of the size shown in these Defensive Buying updates, then it’s a good chance it’ll be me topping up!

The number of shares in a defensive buy is dictated primarily by the asking price and the buy/sell commission that you pay – for simplification I will assume that the buy and sell commissions are the same value and will provide a maximum number of shares to buy for a single commission of £5.25, £7.50, £10.00, and £12.00. if your commission is not shown here, then round up to the nearest commission level and use that as a potential maximum number of shares to buy, assuming you are happy with the fundamentals at the latest time and price given.

So let’s kick things off for the week ending 9 December 2016:

I must reiterate that these are the MAXIMUM number of shares that I may personally buy at the latest price and time for the companies above. I understand that the price may drop further, but I am ready to potentially add to my holding with a further defensive buy assuming I am still happy with their fundamentals. These are not day trades and are more useful for those casual investors who prefer to take a long term view on investing and who may only keep a wandering eye on developments on a weekly basis.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.