May 2018: Exits behaving like buses

May was a pretty extraordinary month for my finances.

In the wider world, the most obvious newsflow appeared to be about Italy’s attempts to form a populist government, and the tariffs/trade war begun by Trump in the previous month. This led to the European currencies falling against the ‘Pacific’ currencies (USD and AUD is what I care about).

The FTSE-100 rose almost completely to compensate for the drop in the pound, as it often does. Eurozone stocks however fall slightly, in what was a marked shift versus UK stocks.  And US equities rose slightly, which I think was a mixture of higher oil prices, further tech boom, and generally a sense that Trump is making some progress.  Bonds barely moved.

But in my little bubble there was a lot more news than this.

The most dramatic news for me was in one of my illiquid holdings, where an offer to buy it has just come through unexpectedly, at a significant price premium to what I had valued it at.  This is a significant holding for me, so the price premium is worth six figures. However, it is in a pot which includes my legacy private banking holdings, and I don’t include in my ‘invested portfolio’ tracking, so you won’t see this significant uptick in my monthly returns tracking.

Secondly I have had confirmation that I can expect the second of two windfalls I wrote about a couple of months ago to arrive later this month. This will add a useful sum to the invested portfolio. Between them, all these bits of good news increase my returns, or increase my portfolio, or both.

Overall I have had three unanticipated ‘exits’ within about one month.  This will significantly reshape my portfolio. When exits are as rare as hen’s teeth, I feel blessed.

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April 2018: All eyes on Asia.

April saw a marked change in the dismal stockmarket performance this year. How come?

It’s not every month that a 60+ year war appears to have concluded.  I’m all in favour of wrapping up these geopolitical loose ends, but I don’t think my portfolio cared that much about the history being made in Korea.

Tech has had a good month.  Trump has been momentarily distracted from Amazon-bashing; Netflix reported strong growth; so did Google, and so on. My small Tech portfolio was up 8% on the month.

Trump has also had, dare I say it, a relatively good month on his trade bashing.  Sentiment is starting to move in his favour on this, at least in what I read, helped by the sense that some important tariffs may fall under his assault on China/etc.  Shareholders of Boeing, anything Russian etc haven’t had much fun but the rest of us have got plenty to celebrate.

Overall equities in most markets were up.  FTSE gained almost 6% on the month.  The US dollar rose 2% and its stock market climbed by more than that.  Other main equity markets that I track – notably Eurozone and Australia – gained 4%.  At this rate the stock markets have almost recovered the losses so far in the year.

Bonds dropped but only slightly. Overall the blended markets I track rose by 5% in April; 4% in constant currencies, and a 1% uplift provided by the USD.

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Mar 2018: President Chump?

March took ages.  Heck, there was even a blue moon.  So much seemed to go wrong I am probably going to miss stuff out.

Obviously Trump started a trade war.  I’m not sure the exact impact on the markets but I think this marked a clear Sell signal for S&P500.  I often think of HSBC as a proxy for global (esp. Asian) trade, and its stock tells the story as well as any. March wasn’t particularly notable except that the miserable Q1 trend continued, with hardly any respite.

Next, and closer to home, Aviva kicked off some unwelcome news by announcing they were going to redeem their irredeemable shares.  Or something similar.  I own a bunch of similar holdings (notably NWBD and LLPC, after a helpful tip by Monevator back in 2010).  Anything which looked like a blue chip pref share with any sort of ‘irredeemable’ tag got clobbered, not entirely surprisingly.  I did a handy table mid month showing the extent of the damage inflicted, at peak. At one point I was down almost 1% of my total portfolio thanks to this mess.  Talk about unexpected correlations.

Fortunately, by month end Aviva had relented and these holdings had mostly regained their poise.  I think hindsight will show that we were lucky it was Aviva which played with redeemable fire here – Aviva has a strong ethical position and was successfully shouted down by small shareholders.  Had RBS/Lloyds/Santander had a crack I am not sure we’d have been so lucky.  And now it will be harder for anybody else do have a go in the future.

While we are talking about unforced errors, for some reason the global media decided March was the time to take down Facebook 50m pegs or two.  Having read Dominic Cumming’s riveting BrexitRef blog post, I somehow felt that this news horse had bolted about 18 months ago, but I must have missed something.  In any case Facebook’s market cap shed about $40bn, which is a lot of unicorns.

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