Apr ’23: Wind and windfalls

April saw the season of long weekends begin here in the UK.

Easter saw me inspired by the Ermine to check out Dorset’s Chesil beach. We struck lucky with the weather and had a fine, distinctly non-London, time, over a very blustery Easter weekend. My walking shoes seem to have shrunk and after a 15km yomp what happened to my toes doesn’t make for blog-suitable content. Maybe I should stick to London after all, where such tribulations don’t seem to happen.

The economy seems to keep inflating along. Inflation has ‘dropped’ to 10.1%, latest figures show. Which really has you wondering what happens to interest rates. Rates seem high right now, but in the real world they are barely half of the rate of inflation. Something has to give – will it be inflation dropping as energy ‘laps’ last year’s price rises, or will wages chase inflation upwards pulling the Bank of England with them? Or will policymakers find ways to prolong this inflationary period, to deflate the country’s record high level of national debt? Time will tell.

Meanwhile, strikes continue to rumble on – with the NHS being the most newsworthy in April. And the business press has been full of doom and gloom about the London stock exchange, for another month. Some media clippings are at the bottom of the post.

Markets in April

There isn’t a lot to see in the markets in April.

For some reason UK equities had a pretty decent month. I didn’t really notice that happening, and can’t see an obvious pattern to explain it. But UK bonds dropped almost equally, which I think mirrors inflation remaining in double digit land longer than many expected.

The Australian government came out swinging against its central bank, with proposals to bring its central bank up to ‘modern’ standards. The Australian economy has had such a good run for so long – and there’s still plenty of ground to dig up – that nothing has appeared to be broken and in need of fixing. But now that they’ve had the merest hint of imported inflation, suddenly the central bank gets a kicking. I think it makes some sense though at this distance it is hard to tell.

Overall my markets rose by 1.3%, and my currencies fell by 0.9%, resulting in a market move of +0.4% in April in GBP terms. Against that my portfolio rose almost exactly in line; I saw very little activity in my portfolios.

The first windfall for ages

April saw my first ‘windfall’ for months. I had a five figure payout from the sale of an angel investment. The sale was actually some time ago, so this payment was a deferred receivable. But it was a five figure payout, and was very welcome. I’ve used it to max out my ISAs (watch for that upcoming blog post!) and repay a chunk margin loan. Also, it’s paying for some new furniture.

Cash/loan exposure

April was also a decent month for dividend income, following from an even stronger March. Not every month’s dividends exceeds last year’s but I do expect my total divi income for the year to exceed last year’s.

Investment income by month, 2013 to 2023

As I wrote this post, I had some very unwelcome news on the margin loan front – which deserves its own separate blog post. But thankfully this news came as I finally hit my target allocation, as far as leverage/cash is concerned, for the first time since buying the Coastal Folly. That hasn’t lasted long in fact, because already a few days in to May I am 0.5% ‘short’ of cash, but it’s nice to know I am now in the target zone I’ve had since buying the Coastal Folly in late 2021.

In any case here is my current delta from my target allocation. That currency imbalance – me choosing to concentrate my margin lending in GBP/EUR rather than USD – has been a very bad call over the last few months, with GBP:USD shifting from £1:$1.05 to £1:$1.26 over the last 9 months. That is the price of de-risking.

Delta from target allocation, 5 May 2023

Media clippings

1 thought on “Apr ’23: Wind and windfalls”

  1. I’m not sure the market thinks much of the RBA. AUD/USD looks cheap as chips but is performing awfully given recent USD weakness. Even GBP/AUD has been going up! I think the view is that the RBA is too dovish on inflation. Too slow to act and not decisive enough. Far too worried about property prices.

    I’ve also just spent 4 weeks in Australia. Seeing better half family etc. Haven’t been since late 2019 and it looks stagnant economically. It relies so much on China and hasn’t diversified enough. Dutch disease?

    Liked by 1 person

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