October 2023 – FIRE v London

My psychology around money has changed significantly over the last two years. While some of that is captured in my monthly portfolio updates, I thought it was worth recording some of my emotions while they are still fresh.

Two years ago

Turning the clock back, my financial situation was, in word, ‘flush’. The stock market boom had just crested – S&P500 was at 4400, FTSE-100 was at 7000.

I generally had a surfeit of cash every month, just from earnings – never mind investment income. I saw several exits over a 2 year period in my angel investing activities. I reinvested both sheltered income and unsheltered income for compound investment growth. I was unmortgaged. Base rates were almost zero – which I exploited with a margin loan – leveraging my portfolio by a target 12% loan-to-value.

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For some reason shoplifting is in the news. There’s evidently an epidemic of it. Not just in the UK, but wider afield too – hence major brands pulling out of cities like San Francisco. From what I hear there is a general increase in antisocial behaviour, dating from the covid-19 pandemic roughly speaking. I’m not sure what is going on but it isn’t sounding good.

Perhaps this is what explains two recent incidents in the UK – neither in London thankfully. The UK’s wonkiest pub was, allegedly, burnt down by its new owners. And just a few days ago one of the UK’s most famous/photographed trees was chopped down by a vandal.

Here in London I haven’t myself particularly experienced this epidemic of antisocial behaviour. Do I live in a bubble, or is London itself somehow avoiding it? Or is it all media hype? I don’t believe the latter.

Markets in September

Meanwhile, in the markets, it isn’t antisocial behaviour exactly but nor is it very social. Markets were generally down in September. UK equities were up, but only when viewed in pounds – which fell significantly in September.

The blended market average dropped 3%, in local currencies. Foreign currencies gained 2.2% vs the GBP, so the wider market only dropped 0.9% in GBP.

My portfolio in September

My portfolio dropped a bit more than that: 1.3%. Given my leverage and my tech exposure (AMZN dropped 8%, for instance), I am where I expected to be.

I made miserable progress repaying my margin loan in September. I have some excuses, but I am not feeling very happy about the situation. My annual interest costs are too high. I finish the month a bit overweight on USA equities, a bit underweight on EUR/Asian equities, and with too large a loan. Thankfully my loan is mostly in GBP – so is falling in value versus global market.