July 2022 – a red hot month

July has been travel month. Not for me, in fact. But London has been full of visitors – and Mrs FvL and I have been inundated. So much so, that it has been handy to have the Coastal Folly for overspill. But London has a lot to offer and it has been fun doing some touristy stuff.

Summer in London

Visitors in mid July saw the hottest temperatures ever recorded in the UK. London saw 40C for its first time. I confess I was down at the Coastal Folly at the hottest point, where sea breezes kept temperatures to a lovely 30C. So I missed the bring-your-cat-to-the-office mayhem going on up in town.

London weather, mid July 2022

(UPDATED: it was hot in Downing Street too, with Johnson finally resigning early in July. That is too well covered for me to add any value here)

The markets had positive momentum throughout July. VWRL, Vanguard’s world equity ETF, was up throughout the month and ended up 6.2%. Bonds took a bit longer to rise but from mid month they too rose significantly. With the 25% leverage I’m targeting, my markets rose on average just over 6% – the fifth best result in at least 7 years.

Market movements in July 2022
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June 2022 – drawdown breach!

June was gloomy.

Not in London, which is lively, crowded even – and a delight to see. Pavements are busy, restaurants are proving tricky to get bookings in, the river is heaving. I even managed to get to ‘the beach’:

Sand, tides, sunshine – locally in London

I managed to spend a bit of time down around the Coastal Folly too. I’m still finding my rhythm having two homes but so far it is going pretty well. A London kitchen project is running late / badly which gives us plenty of excuses to be down by the coast.

Sandbanks, tides, sunshine – down by the coast

The UK saw a week disrupted by rail strikes but with Working From Home now an option and so many cycle/etc options it didn’t feel too disruptive for me. It was interesting though how positively the union leader Mick Lynch came across in the media and I think if we do find ourselves in a year of employee-driven strikes he will deserve the credit/blame for it. The RMT appears to be asking for about 9% pay increases for train workers. Drivers are coming up next, apparently, along with GPs (asking for 30%!). We are rapidly getting away from ‘inflation is just spiking up temporarily’ to ‘well, if they’re getting it, then I want it’ and that could take years – and a much more competent government – to shake out.

And it is this inflation gloom which is suddenly pervasive. Not just in the UK, though the UK does appear to be taking a particular bruising. Markets got hammered in June and, lest anybody forgets, they hadn’t had a good run of things earlier in the year either.

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May 2022 – markets nearing my max drawdown

Australia has general elections every three years or so, and just had its latest one last month. How you can sensibly govern a country when your next election is either 1 or 2 years away always puzzles me, but the Australians have made a decent fist of it over the last 30 years – certainly better than the UK has.

Despite the frequency of elections, it is an unusual Prime Minister in recent times who makes it through to the next general election unscathed – Kevin Rudd, Julia Gillard, Malcolm Turnbull, Tony Abbott etc have all been replaced while in situ. In any case, ScoMo made it to the election, but then got replaced by the opposition – Tony Albanese, a centre left union figure. While his win wasn’t a big surprise, the strength of the defeat of ScoMo’s parties was a surprise. Some folks I know are horrified, but at this distance, he looks pretty similar to me.

Australian general election: One out, one in

The markets don’t seem to have much to report. Somehow I suspect not much will change – let the next less-than-3 years roll on.

Australian equities, bonds (cyan Vanguard line) and selected stocks, last 6 months

Meanwhile, up in the Northern hemisphere, London’s Crossrail Elizabeth line finally opened (it’s great!), and the markets have continued the volatile decline they have been on for a year now. My portfolio dropped 7% in January. February fell too, though the fall was recovered in March. Then April fell 7%. And, at points, markets were down almost 7% in May – see the S&P graph below.

Performance of S&P 500, shown as growth of (hypothetical) USD$10k, during May 2022
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