The last quarter was not a great one with my portfolio dropping by 2.6%. After a decent summer, September was a real shocker with a rotation away from growth shares hitting most of the shares in my portfolio and my watchlist simultaneously. I was also hit by a couple of profit warnings from CMC Markets and Boohoo. Underperformance against my benchmarks will happen from time to time so this isn’t a great cause for concern but it does serve as a warning to check my strategy is still working. I’m feeling cautious about its short to medium term prospects from here so have raised a bit of cash.

Inflation has been consistent theme in my posts for a while now, to the extent that it has become rather boring to talk about. However, it is unfortunately still the most important macro issue at the moment and the signs of how disruptive and persistent its effects might be are getting worse. Central bankers are starting to express concern that it might be less transitory than they hoped and asset markets have reacted badly with yields rising again and equities resuming their rotation from growth to value. Last week was pretty dire for my portfolio (down around 9%) as many shares turned down at the same time.

September didn’t quite live up to the optimistic outlook I had at the beginning of the month. It turned out to be decidedly more wobbly, with a Chinese corporate debt crisis added to the familiar old spectre of rising interest rates and a fairly severe profit warning hitting my portfolio.

I’m feeling refreshed after having finally managed to escape the country and take a quick trip to France. August was a decent month for the markets and my portfolio has been doing pretty well despite a few disappointing reactions to recent results. For now market conditions seem promising – most of the shares in my portfolio and watchlist have strong momentum and look primed to go higher, while overall sentiment seems healthily skeptical. It seems quite likely that we get a bit of a run from here.

Many of the Covid restrictions have been lifted now but the world still seems far from returning to normal. The information war continues apace, with different groups of people further entrenching themselves in their various bubbles of reality. While fascinating from a sociological perspective, these are not the easiest times to be living through. From an investing perspective, predicting the fallout from the restrictions continues to create its own controversies and unwanted distraction.

2021 has been an OK year so far investing-wise. My portfolio is currently near its highs and has clocked in at a 16.7% return at the half way point. This is above most of my benchmarks and more or less in line with my long term CAGR. However, after the excitement of last year and given how well the UK market has been doing in general, progress has felt a little pedestrian. Overall I’m happy, though keen to identify any weaknesses in my strategy or whether I could be doing anything differently.

I have a flurry of trades to update on for June as I’ve responded to various opportunities and threats, including a recent profit warning at erstwhile favourite Best of the Best. I’ve made more trades than ideally I would have liked to, but hopefully the portfolio is sufficiently improved as a result.

The summer feels like it has kicked off. A spell of decent weather and the pubs and restaurants opening has contributed to a festival atmosphere, at least round where we live. It’s great to be catching up more with friends and family even if my social skills have got a bit rusty. The stock market seems to be rocking to a more languid vibe. Volatility seems to have come down again since the ups and downs of the first quarter. My portfolio has been idly shuffling backwards and forwards. The main challenge at the moment is to restrain myself from making unnecessary trades driven by boredom and post-pandemic mania. I’m rather struggling with this challenge and have quite a few trades to update on from the last month or so.

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.

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.