I am yet to see any sign of consistent performance in my fund - but in part that's because of my constant fiddling with the way I calculate the figures I report. This isn't in the same way my former-fixed income fund manager described that his marketing did when he was in the banks - identifying which period of time demonstrated the best period of performance then reporting it. No, I am trying to give as accurate account as possible; in part, it affects whether I continue this whole enterprise given that I have a lot of "skin in the game" i.e. my retirement income!
So, what is interesting this quarter? Well, my performance is again lagging the market (even though the market has really bellyflopped in the last few weeks). Disappointing really, given that I felt I had sped ahead when the markets realised that the world was still screwed - and that lots of people trying to outprint each other's currencies didn't actually produce a material growth effect.
I have dropped in my comparison against the Trustnet managers - and am now sitting in the 76th percentile (I also worked out you can actually see the performance for the year to date) - including an uplift of 1.2% for my lack of fund manager management charges (it helps a lot!).
A continuation of the good news from last quarter is that, now I am into positive growth, I can expect to net a pension equivalent to about 74% of my current income - although based on 3% inflation for the next 34 years that actually equates to a real income thats about 35.5% of my current salary. At least I won't be a higher rate taxpayer, I suppose!
Last quarter I told you the best and worst performing stocks for growth (Carnival and Aviva respectively) - well this has now changed. Carnival remains my growth genie (although CareTech was pegged back by a second purchase of shares), and my all-time dog is thee ater company Dee Valley Group.
Thinking ahead, I am always trying to think "fundamentals". In some cases I have bought stocks for stupid reasons - but on the whole it is because I believe theyy hae a long term benefit. This means if things are dropping in price it presents a buying opportunity - and my real suckers at the moment are Dee Valley Group, IG Group and Tesco. I'll buy more shares on Tuesday - I wonder if L will go for any of those or if she'll be more keen for something new.
To summarise - at least growth is now positive. There's still bad stuff on the horizon, so how the storm is weathered will dictate my future.
Saturday 29 September 2012
Thursday 6 September 2012
Sell out!
Sugar rushes all round today as the European Central Bank promised to bring bond yields into line. So that means that the ECB will buy bonds of government that noone else wants to lend to in order to make their borrowing costs lower. So rewarding their naughty behavior when they borrowed more than they can afford when times were good. Real moral hazard stuff.
Anyway, the stock markets liked it because it makes everything feel warm and safe - so stock prices went up. Don't count on them staying that way forever.
I made one further change to my portfolio yesterday - I mentioned earlier this year that I owned shares in a Scottish Widows tracker. Having looked at the breakdown, and unsurprisingly given its an index tracker, its stuffed full of those stocks L doesn't think are ethical - British American Tobacco, BAE etc etc. She wants it sold, so that's what i've started to do. Yesterday I sold a third of my holding - my intention is to sell the other two thirds over the coming two to four weeks. That'll leave me with substantially more cash to invest over the coming months.
Otherwise, little to report.
Anyway, the stock markets liked it because it makes everything feel warm and safe - so stock prices went up. Don't count on them staying that way forever.
I made one further change to my portfolio yesterday - I mentioned earlier this year that I owned shares in a Scottish Widows tracker. Having looked at the breakdown, and unsurprisingly given its an index tracker, its stuffed full of those stocks L doesn't think are ethical - British American Tobacco, BAE etc etc. She wants it sold, so that's what i've started to do. Yesterday I sold a third of my holding - my intention is to sell the other two thirds over the coming two to four weeks. That'll leave me with substantially more cash to invest over the coming months.
Otherwise, little to report.
Monday 3 September 2012
What happens when it all goes wrong?
Over the last few days I've been running the scenario of "when it all goes wrong" round in my head. I've suggested several times before that I am holding onto around a third of my pension fund as cash in order to take advantage of the stock market collapsing - but I haven't actually decided what i will do when that happens.
And this seems to me to be quite important - if and when the markets crash - later this year or early next year when the Greeks get the boot and China's poor economic situation becomes apparent - I'll need to act really quickly.
Looking back at the 2008, 2002 and 1998 "tits up" moments in the markets, there's some interesting things to observe:
This Guardian article lists the top 10 largest falls in the FTSE 100 ever. The range is 5.58% to 12.22%. All but one were in the 2008 or 1987 market crashes (it was in 2001).
So, what does that information tell me about trading strategy? Well, firstly a drop over 5%+ should indicate that it's time to buy. Secondly, there's no reason to panic - these collapses last months rather than weeks. So, with that in mind, a 5%+ drop should indicate that its time to double the rate of market investment to start eating into that reserve fund - so investing around once every 16 days or so.
With regards individual shares, market panics usually lead to wholesale sell offs before the wheat is sorted from the chaff - so buying into the big reliable companies first is probably prudent, as they are likely to rebound faster. Smaller stocks are more likely to spend time in the doldrums whilst analysts try and work out what to start recommending again.
Obviously the FTSE 100 is UK listed stocks, although not necessary UK-focussed stocks (think about all those miners from post-Soviet states). International diversification will be key - who'd want to rely on one potentially knackered market when they could have the safety of exposure to many?
My first go at a list (to be bought in this order) would be something along these lines:
I'll update this every couple of months whilst we wait for the day stocks get cheap. Remember Baron Rothschild: "Buy when there's blood in the streets, even if the blood is your own."
And this seems to me to be quite important - if and when the markets crash - later this year or early next year when the Greeks get the boot and China's poor economic situation becomes apparent - I'll need to act really quickly.
Looking back at the 2008, 2002 and 1998 "tits up" moments in the markets, there's some interesting things to observe:
- In 1998 it took 2.5 months for the FTSE 100 to drop 1400 points
- In 2002/3 it took 10 months for the FTSE 100 to drop 1600 points
- In 2008/9 it took 6 months for the FTSE to drop 2000 points
This Guardian article lists the top 10 largest falls in the FTSE 100 ever. The range is 5.58% to 12.22%. All but one were in the 2008 or 1987 market crashes (it was in 2001).
So, what does that information tell me about trading strategy? Well, firstly a drop over 5%+ should indicate that it's time to buy. Secondly, there's no reason to panic - these collapses last months rather than weeks. So, with that in mind, a 5%+ drop should indicate that its time to double the rate of market investment to start eating into that reserve fund - so investing around once every 16 days or so.
With regards individual shares, market panics usually lead to wholesale sell offs before the wheat is sorted from the chaff - so buying into the big reliable companies first is probably prudent, as they are likely to rebound faster. Smaller stocks are more likely to spend time in the doldrums whilst analysts try and work out what to start recommending again.
Obviously the FTSE 100 is UK listed stocks, although not necessary UK-focussed stocks (think about all those miners from post-Soviet states). International diversification will be key - who'd want to rely on one potentially knackered market when they could have the safety of exposure to many?
My first go at a list (to be bought in this order) would be something along these lines:
- Unilever - big, international, selling something everything needs
- Microsoft Corporation - totally market dominant
- eBay- Paypal will give this company amazing growth, and the auction site is market dominant internationally
- LinkedIn Corporation - great growth story, with a high alpha (market correlation)
- ARM Holdings - this and Imagination between them dominant the chip market for mobile devices
- Imagination Technologies Group - as per ARM Holdings
- XP Power - great growth stock exposed to the far eastern market
- Golar LNG - 100% utilisation at the moment, a play on the global gas growth trend
- Fenner plc - if you want conveyor belts for mining, this is the company you go to. Late in the list because commodities arent going to be bouncing anywhere at the end of their supercycle
I'll update this every couple of months whilst we wait for the day stocks get cheap. Remember Baron Rothschild: "Buy when there's blood in the streets, even if the blood is your own."
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