My January 2016 returns

Phew, what a month.

I thought December was nerve-wracking.  Check out how January compares – the UK/US equity markets fell almost 10% in the first 20 days and then clawed most of this back at the last minute.  Bonds had a much smoother ride, unlike December.

Screen Shot 2016-01-30 at 21.42.01.png

Those of us, er, trying to fund a major house purchase out of stocks/bonds must be Stark Raving Mad.  Not to mention anybody actually borrowing money backed by a portfolio of this rollercoaster.

When you look at the returns by asset class and geography, you see two things clearly:

  • Bonds up, equities down.
  • USA worst, UK least bad.

2016 01 performance by asset class.png

Where does this leave me?  Well, based on my target allocation, the market has fallen 6.8%.  In the month.  One fifteenth of its value down, in one twelve of the year.  Heavens. In fact it’s worse than that, because right now I’m not at my target allocation – I remain overweight in equities (which are down) and the UK (which is the least bad).  The market I’m actually exposed to fell by about 7.8%.  This really is down a twelfth in a month.

The truth is, I’m lucky.  My actual performance for the portfolio I manage was down only 2.2% (though I need to caveat this because unitising my portfolio has been particularly complex with the number of transactions I’ve been performing, so I may yet need to correct these figures).  I outperformed my markets by about 5%.  How did I achieve this? Mostly, because I was very fortunate with my sales – the bulk of my sales were the week either side of Jan 1st – as my graph above shows this was the right time to be selling. I was selling in one account and bulking up in my marginable account and I managed mostly to buy at lower prices than I’d been selling at.  I’ve been range trading FTSE-100 and that strategy, again, continues to broadly work.

Nonetheless, negative 2.2% isn’t helping my performance.  At least my worst drawdown remains unscathed at -7%; with my leveraged portfolio this number is particularly key to me.  I await February with some trepidation.





Housing, pt 10: Stress testing

I’m nearing the end of my Dream Home purchasing odyssey. In fact I have mustered the cash needed to buy the home, and wired it to my lawyer, in good time for completion.  Hooray!

What I haven’t quite found yet is the cash for the stamp duty, but I have another month to find that and think the market volatility could help. In any case you can see in my graph below that I have obtained over 100% of the purchase price – I am only a few % away from where I need to be including transaction fees etc.

2016 01 23 FIREvLondon Dream Home liquidation schedule

This means that right now I am the proud owner of over £1m of new debt.

Continue reading “Housing, pt 10: Stress testing”

Five investments to start your portfolio

I came across an excellent article recently in Australia’s Sydney Morning Herald – Five simple trades to get you started with share investment – and found myself lamenting that such clear, wise guidance isn’t commonly seen in the UK press.

The best time to start investing is always today.  Especially when the stock market (sorry, share market, in Australia) is offering lower prices than for many years previously.

The specific suggestions for Australians aren’t quite going to work for most Brits, Americans or continental Europeans however.  Here are my tweaks for those of us in the northern hemisphere: Continue reading “Five investments to start your portfolio”