2018’s goals and January 2018’s returnsPosted: 2018-02-03
So, my normal blogging rhythm has been slowing down a bit. Time for a quick catch-up.
January’s come and gone, and I haven’t even written up my investing goals for the year.
First of all, what’s been going on in January?
The Trump tax cuts may have technically been passed in December but it feels as if markets in January have been dominated by them. I confess to being surprised, and pleased, to see a variety of US businesses committing to pass through some of the tax cuts to their employees – e.g. Walmart, Boeing, JP Morgan, AT&T, Disney, Home Depot and others. This all looks quite positive for US stocks, the US economy, and probably thus world trade.
It is thus not too surprising that world equities are up, and the US dollar has fallen over 5% vs the pound. Surely a good month to be in the UK? Alas not, as FTSE has fallen over 2% while S&P is up over 5%. Brits have been better holding S&P than FTSE, not for the first time.
Major indices, or currencies, moving more than 5% in a month is pretty unusual. I don’t have a handy Bloomberg terminal/expertise, but I think there have been only 8 months in the last five years where S&P has moved by 5% or more.
For me the most astonishing month-end result was my (fairly small) tech portfolio. This tech portfolio returned 25% on the month. It is, admittedly, modestly leveraged. But to move up a quarter in one month is unheard of for one of my subportfolios.
Overall, the markets I’m exposed to rose on average 1.9%. Against this, the currency impact hit my holdings, measured in GBP, by 2.9%. So my benchmark saw a loss of 1.0%. Meanwhile my actual portfolio saw a loss, measured in GBP, of 0.5%. In the scheme of things this wasn’t a bad result; my tech portfolio pulled me up but in other respects I pretty much tracked the market.
In other news I have made a couple of big withdrawals from the portfolio in January. I had to pay the taxman, which in the UK has a deadline of 31 January. I also have made a significant loan from my PIC – which counts as a withdrawal from my tracked investment portfolio. Withdrawals don’t directly affect my returns, because I track my returns in a unitised way, but they do shrink the visible nest egg and subtly affect my psychology.
Raising my gaze slightly, I want to record my overall investing goals for the year. I’m not quite continuing last year’s goals, but I’m not changing much either. As usual I have three overall goals. They are:
- Reduce taxes & expenses. I want my blended investment tax rate to drop from 30.0% to below 29%; I think through taking up my ISA allowances to the max and slowly shifting funds into my PIC I can achieve this. I also want to reduce my average expense rate from 0.65% (0.22% excluding my private banking assets) to ideally 0.60%. I’m not quite sure how I’m going to achieve this but I am hopeful that some high fee assets will liquidate this year.
- Maintain my (slowly deleveraging) allocation. Really I have two intentions here. First of all I want to continue to deleverage, which means my target allocation will slowly change from minus 25% cash to, probably, minus 20% cash. Secondly I need to stay within the tramlines, i.e. keep close to my target allocation.
- Learn something new. My role models Warren Buffett and Charlie Munger have one clear thing in common: they read a helluva lot, and they broaden their minds. I think it is time to take a leaf out of their book, if you’ll pardon the pun. I have considered setting a goal around reading books, but I know I’ll miss it. But I think the real test, and a worthy goal, is to learn something new this year that I can put into practice in my investing.
Can you help? Anything particular I should learn?