I’ve been starting to think that there may now be relatively more return from me digging a little deeper into the long term fundamentals in choosing investments. While I still think the overall strategy is the most important thing to get right, at this point it feels like there are diminishing returns to continuing to tweak my approach from a top-down perspective. We are at a point in the cycle where I’m starting to feel more wary about following momentum and want to focus more on holding the investments where my long term conviction, given current valuations, is highest.Continue reading
Recently we passed the anniversary of the first lockdown. It’s hard to fathom that we have spent more than a year largely in social isolation. I’m glad that restrictions are finally starting to be lifted and hopeful that some semblance of normal life may resume soon. It’s a good feeling to start putting more social plans in the calendar even if the possibility of international travel to see family still seems remote. The past few months have been tough. The prospect of commuting to the office and sitting in ‘real life’ meetings has never seemed so appealing.
My portfolio hasn’t made much headway over the past few weeks but I’m pleased not to have suffered too much of the drawdown that afflicted more racy growth stocks. Overall I’m happy with my return of 8.2% YTD.Continue reading
In my last post, I decided it was time to start taking some evasive action in response to increasing signs of impending trouble for more highly-rated growth businesses. I sold off some of my most expensive holdings, converting about a quarter of my portfolio into cash. Since then I’ve been thinking more about what my next move should be.Continue reading
As we near the anniversary of the fastest market crash in history, things are starting to look pretty dicey again. After a fairly spectacular first two months, my portfolio has been hit by another rather savage rotation from growth to value. This has been prompted by a sell off in long term treasury bonds, which in turn seem to have been driven by rising expectations of rapid economic growth following the reopening of the economies. So is this another short term rotation from value to growth, imminently due to reverse when the Fed steps in again, or the beginning of the long-awaited bursting of the ‘bubble’? I’ve been considering whether it’s time for me to take some evasive action.Continue reading
A few people I know seem to have started to show an interest in investing lately. I’ve been shown several fairly hilarious videos on investing from my wife’s TikTok feed, which seems a bit like the modern day equivalent of hearing stock tips from the shoeshine boy ie probably not a good sign. In the meantime my news feed is filled with talk of ‘rampant speculation’ by retail investors in various bizarre stocks or cryptocurrencies. Interesting times.Continue reading
My investing strategy has two stages. The first is to identify a watchlist of the highest quality businesses I can find. This takes advantage of the ‘big idea’ underpinning my strategy – that I can identify high quality businesses that are likely to be materially undervalued when their long term growth is properly accounted for. The second stage is to trade the businesses on the watchlist based on their current momentum, valuation and news flow.
In practice, it’s been the first stage rather than the second which has delivered most of the returns. This is demonstrated by the strong relative performance of my benchmark buy and hold portfolio, which simply holds all of the shares on my watchlist for the long term. My approach to the second stage is less clearly defined and has evolved over time as I have experimented with different approaches. If I want to improve my results, I think this is what I need to focus on.Continue reading
January seems to have got off to a flying start with stock markets resuming their bull run. I’m currently basking in the warm glow from a rash of positive trading updates issued by several of my larger holdings, including Boohoo, Games Workshop, Gamma Communications, Liontrust and most notably Best of the Best (notwithstanding rather perverse reactions from Boohoo and Games Workshop). Nice as this is, it’s hard to ignore the current speculation that we are in a bubble and that impending doom is lurking somewhere round the corner. It does feel that way. After discussing this in my last few posts, I don’t have much new to say about the bubble. I set out my plan of action in my January review.Continue reading
Well I’m glad to see the back of 2020, a year in which the world truly went to shit. Given the catastrophic hit to GDP, it’s surprising that 2020 turned out to be a very decent year for investors who managed to keep a level head. My overall return for 2020 came in at 34.1%, exceeding my long term average. All in all I’m happy with this result, but I was a bit lucky to be honest.Continue reading
The continued strength of the stock market is being embraced by some investors, eagerly anticipating the long-awaited resumption of normality after the Covid era. Many others of a more skeptical disposition are watching in disbelief as they see a bubble of historic proportions continue to grow. This latter view is also being stoked by some apparently egregious examples of excessive speculation in certain technology stocks: the inexorable rise of Tesla and the DoorDash and Airbnb IPOs this week to name a few.Continue reading
It’s been a year since I launched my experimental copycat portfolio, comprised of the largest positions of a selection of the best investors I can find without expending much effort. The portfolio has done pretty well, returning 17.3% compared to 15.8% for the S&P 500 and -13.3% for the FTSE100.Continue reading