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.





3 thoughts on “My January 2016 returns”

  1. Always find these monthly posts interesting. Thanks. As we’ve discussed previously my portfolio carries less volatility risk than your good self. In ‘good times’ I lose out (or is that I am thumped) in comparison as we’ve seen. In ‘bad times’ I should win out and we see that today. For January I’m down -0.9% vs your -2.2%.

    Will be interesting to compare over the very long term.

    Liked by 1 person

      1. Yes, whenever I report returns it’s always net of ins/outs. January was almost a perfect demonstration of the intention behind my widely diversified portfolio. I have plenty of market exposure, it’s just a lot of differing markets. This month falls in all of my equities was nicely counteracted by a 9.7% increase in my gold, a 4.0% increase in my index linked gilts and a 2.0% increase in my European property. Exactly what I hoped I’d see when I set my strategy all those years ago.

        Liked by 1 person

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