In praise of Limit Orders

I’ve been busy in the last few months.  I’ve bought a house, and to support this I’ve dramatically restructured by investment portfolio.  And I’ve never been more grateful for Limit Orders.

What is a Limit Order?

As most of my readers will already know, a Limit Order is an order to buy or sell a particular asset (usually a company’s shares, or an ETF) only when the price reaches a particular point before a deadline.

The alternative to a Limit Order is a Market order, which means to buy/sell that asset right now, at the current market price.

A Limit Order means to buy/sell only provided a price condition is met.  By definition this condition might take some time to occur, or may never occur, and hence you need to set a deadline.  This deadline might be ‘next trading day’ or it could be several weeks away.  In my experience brokers don’t like deadlines longer than about 3 months away.

What do I use Limit Orders for?

In recent weeks, I have found myself using Limit Orders in five scenarios: Continue reading “In praise of Limit Orders”

My Feb ’16 returns

So, it’s over.  Both the month of February, and the process of buying the Dream Home.  My portfolio is in a very different place from where it was on 1 December.  It isn’t yet where I want it to be but it’s made a major transition already and hasn’t far to go to reach my new intended asset allocation.

You can see in the graph below the transition I’m trying to make.  Essentially I am rebalancing away from the UK, and towards fixed income. My upweight on the USA is almost done, with the blue US exposure having increased from about 20% to about 35% of my exposure.  My downweight on the UK and International has further to go.  But I am struggling to switch from equities (74%, versus 66% ideally) to fixed income (~25%, versus ~33% hopefully).  Thankfully in February this hasn’t affected me much, as we shall see.

Continue reading “My Feb ’16 returns”