I started this blog barely three months ago, and no sooner have I started it than my portfolio has just seen two of the worst months since I started tracking it systematically over three years ago. June saw my invested portfolio drop almost 4%; I had a partial rebound in July, but now August has seen me drop by 4.4%. My annualised percentage over 2.5 years has dropped from 12% to 9.8%, my maximum drawdown (peak to trough) is now -6%, and my Sharpe ratio (a measure of return for a constant level of risk/volatility) has dropped from almost 2 to close to 1. Maybe my new blog has jinxed the global markets….
… and if it has, maybe I should start another blog.
In fact I am pretty thrilled with August. My invested portfolio is down 4.4%, yes, but in fact this is great news for two reasons.
First of all, the overall market (weighted by my target allocation) is down over 6% (equities in Australia, USA, and ROW down between 8 and 11%!), so I am outperforming. I wish I could give give fantastic reasons why I am sure to outperform, and I can’t, but in general terms I outperform more frequently than I underperform and I’m happy that this happened in such a volatile month.
It was certainly yet another great month to be in bonds. UK bonds fell by about 1.5%, USA bonds by 0.1% and ROW by about 0.6%; in the scheme of things these were good things to have.
In addition, my active positions generally fared better than the passive market – largely because I tend to be underweight on commodity stocks, Asia, and such like.
The second reason I’m pretty chuffed with my 4.4% dip in August? Well, the wider market may be down by more than 6%, but almost every company in it is worth, in my view, the same as it was worth a month ago. Which means that Mr Market is offering me a 6% special offer. Happy days. If only I had more money in my wallet. I accept that some particularly Chinese-focused businesses (e.g. HSBC, Prudential, Aberdeen Asset Management) now look less valuable than they did a few weeks ago. Maybe too the German automobile companies. But 3M? P&G? Bank of Nova Scotia? Come off it. A bunch of blue chip S&P 500 companies, even some Dividend Champions, are yielding 3.5% or better right now. So I’m trying to fill my boots, and as I hope to have a few more decades left in this game, long may these conditions continue.