Recalibrating my portfolio
Posted: 2018-08-13 Filed under: Investing philosophy 5 CommentsFinally my delayed liquidity arrived. I have sold two large assets, leaving me with a lot of cash to redeploy.
As with an earlier angel investing windfall, when I have unexpected liquidity I follow a process. First of all I set aside taxes due, then charity donations, then other ‘IOUs’. Then I move the funds into appropriate portfolio accounts and start investing cash against my investment allocation.
However the size of the cash this time around has left me making a few tweaks to my setup.
At last, sleeping soundly at night with an equity portfolio loan
First of all I am taking the opportunity of this liquidity to pay down a significant chunk of my margin loan.
I am surprised what a positive psychological impact my loan reduction has had on me. I feel like the episode that began in December 2015, on a whim, when Mrs FvL and I decided to buy our Dream Home, is now over. Not because my assets have recovered to the pre-Dream Home level, which they haven’t. Nor because the loan is now fully repaid, which it isn’t. But the risk I took by taking out a £2m+ portfolio loan is now, for all practical purposes, gone.
July 2018: The trade news sweetens
Posted: 2018-08-09 Filed under: Investment returns Leave a commentSo far as I can see the key geopolitical news in July was a distinct improvement in the US trade war music, if war music is a thing. In particular the EU:USA dynamics improved dramatically when the EU Commission President, Jean-Paul Juncker, showed Trump how to paint trade by numbers.
Given that markets had been fretting that Trump would start punitively taxing German cars, which he has supported for several decades, the Juncker announcement that the EU would buy more soyabeans had a surprisingly positive effect. Or at least, that’s how I account for the 3-5% increase in equity markets in USA/International (Europe), compared to just over 1% in the UK/Australia markets I track.
In other news, the pound fell a bit, and correspondingly the UK equity markets rose a bit. I don’t really know why Oz equities were up, in sterling terms, by 2% for the second month running, but I’m certainly not complaining.
June 2018: The liquidity of treacle
Posted: 2018-07-08 Filed under: Investment returns 1 CommentLife somewhat returned to normal in June.
By normal I mean the tariff war resumed, Brexit chaos continued, European political dysfunction filled the newspapers and so forth. The US and Europe now have tariffs against each other on steel and Harley Davidsons. But more dangerous escalation looms – with Trump clearly gearing up to impose tariffs on German European cars.
From a market point of view the big loser were major exporting markets. In my world, this meant ‘International’ equities, which lost 2.5%, even as the Euro rose a little against the pound. UK/US equities dipped slightly too.
On a much brighter note, Australian equities jumped, which I think was due to large electoral bribe tax cut passing both houses of parliament. Bonds rose slightly, in line with their long run average.
The second windfall that I was expecting in June still hasn’t arrived. Just as well I hadn’t spent it yet; even with ‘liquidity events’ the liquidity can feel like treacle, not water.
