Oct 2017: Sex and separatism

Interested, yet?  I’m not mentioning interest, because the Bank of England’s long-awaited base rate decision was on 2 Nov, after the month end.

October felt like back to the basics of human relations, courtesy of Harvey Weinstein.  In the UK we had a foretaste of this drama with the Jimmy Saville scandal a few years ago.  But the rumour mill is whirling around Westminster, and the first scalp – Michael Fallon – has just been claimed.  It feels very reminiscent of the dark days of poor old John Major’s wafer-thin majority Tory government, just after his ‘back to basics’ plea and well before the Edwina Currie story got out.  None of this has much relevance to investing or markets, not least because the current Tory government has very little credibility in such matters so markets are largely ignoring the daily newsflow.

Overseas the Catalonian independence movement has been the main story.  This has curious echos of the Nationalist nonsense going on in these isles.  But there is clearly more relevance to the real world.  I’m amazed that 20 large Spanish companies managed to relocate to Madrid almost overnight, in order to stay afloat on the ship which the separatists rats (there’s a rat in separatists, geddit?) are jumping off.  If only we’d had this sort of behaviour going on in Scotland or, dare I say it, among UK-based businesses before the Brexit referendum it would have made Project Fear a darn site more credible.

In any case, and notwithstanding some of the Washington histrionics about tax reform, there’s not been much to report in the markets for October.

The word that strikes me when I look at the dashboard for October is ‘benign’. Even the underperformers (red in the grid below) are all up.  Everything was up.  Well, apart from the AUD, but when AUD equities rose 4.5%, and Oz bonds rose more than the currency fell, who’s quibbling about a tiny drop in the AUD?

It is worth noting the end-of-the-month jump in the major tech stocks, triggered by some surprisingly positive earnings releases.  Amazon, Google, and Microsoft (all of which I hold directly) were up 4-12%. Apple, Facebook and Netflix (of whom I’m not a shareholder) had a similar uptick. But the underlying market impact from these changes wasn’t that significant, as there was a zero-sum effect – many of the tech folks’ old school rivals took a hit.

Forex lifted my pound-denominated portfolio by about 0.7%.  And the constant currency blended mix rose almost 2%. So my tailwinds gave me a 2.6% lift.  It’s hard to lose in such markets.  Especially when you’re leveraged, as I am.

How did I actually do?  My portfolio gained 3.3% in the month.  This is very consistent with a leveraged return on (1.9%+0.7%).  In fact it’s the best month so far this year, and the third best in the last two years.

With such good weather, I’m continuing to patch up my roof. My Loan-To-Value is now below 24%.  I’ve got further to go to reach my latest target allocation, at which point my LTV will be 20%.  But I’m under control.