Performance so far


Since the start of 2012 I have:

Gained 2.94% (excluding dividends and costs) of my investment - and the market is up 26.30% according to Google Finance

Been rated in the 65th percentile of all listed Trustnet.com OEIC managers (including dividends and costs - assuming that the market-average 1.6% per annum TER is charged across the board)

Achieved an average yield of 1.44% (averaged over the last twelve months) - compared to a market average of 2.8% (according to Digital Look).

Invested in a way that should deliver a pension around 48% of the value of my current income, based on current annuities and growth rates

Sunday 21 April 2013

I have the POOOOOWWWEERRRRRR

Eleven days ago I made my latest buy.

I'd been feeling a bit funny about the 'always up' effect that seems to be going on in world stock markets these days, so I wanted to leave this purchase a bit longer than normal.

I don't think I previously mentioned, but I have been looking to get into a 'purchase logic' rhythm.  By this I mean that I have identified the main drivers of decision making, and will now rotate through the reasons that drives each purchase.

When I reflected on what and why I was looking at particular shares, I came up with three primary levers:
  • Exposure to an undervalued market
  • 'Safe' companies
  • Technical drivers
For the first, think of Energias de Portugal.  A big reason for considering the stock is that it is closely associated with one of those countries in southern Europe that everyone is worrying about.  Portugal sucked on a cyclically adjusted price-to-earnings measure when I bought EDP - yet in fact it has exposure to Brazil and to the world's third largest renewable energy company.

Unilever was my latest 'safe' company - well know, sustainable (?) dividend grower that it is.  The world would have to go very wrong for Unilever is tank - although som enthusiastically bad management could cause it to go wrong (a problem I believe it is over).

My third lever for selection is the technical drivers.  I previously indicated my attraction to technicals like dividend cover, dividend levels, numbers of countries operated in, free cash flow, dividend growth rates, and earnings per share growth rates.  Well this the basis which I bought on most recently.

I review my weighted portfolio (exempting my gold ETF, which I hold to protect value haha recent gold slump!) against a set of criteria.  I then apply coefficients to make the average of each set of company fundamentals equal the difference between the currently owned shares average yield minus 3%.  This anchor point was sitting at 1.50 prior to my latest buy.

So I looked at currently held companies and a shortlist of others that I also fancied.  For companies those not currenlty held in the portfolio I expect a significantly higher (yet undefined) performance about those held.

I got to a shortlist that included African Barrick Gold (recently bought so disqualified), Games Workshop Group, Aviva, XP Power, and Vodafone (in that order).  Looking at these, I have bought into all but XP Power and Games Workshop Group twice already.   And out of the two I liked XP Power more (although it scored quite a bit less than Games Workshop Group) - this was mainly 'push' away from Games Workshop Group, which has a tight (as in bad) dividend cover of 1.08 versus 1.76.  So that's where I ended up - more XP Power.

So going back to my cycle - next month I need to be looking for stocks in undervalued markets - I can only imagine I will be digging around the Mediterranean region, given how much life sucks down in those parts. 


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