FIRE v London

Jan ’24: A giant tax bill lands

2024-02-10 FIRE v London1 Comment

One of several highlights for me in January was visiting Salisbury cathedral, which I did on an impulse while travelling back from the Coastal Folly.

My main frame of reference to the cathedral being those notorious Russian nerve agent assassins citing it as their reason for visiting England, something which to a Londoner had as much plausibility as as Putin’s claims that Ukraine’s Nazis started the war. I hadn’t taken seriously the idea that the cathedral might actually be a reason to visit England. But I would say I was wrong – it is stunning, and surprisingly moving. Photos really don’t do it justice.

Elsewhere in the world, the focus has shifted from the Ukraine war to the Gaza crisis – which has escalated to the Houthi shipping attacks off the Yemen.

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In praise of Berkshire Hathaway

2024-01-27 FIRE v London8 Comments

I think I first clocked Warren Buffett’s (and Charlie Munger RIP’s) Berkshire Hathaway around the year 2000. I loved the story. Starting from, as the story was told back then, humble beginnings and a paper round, Warren Buffett (and Charlie – who I will stop mentioning but absolutely deserves practically half the credit) had built Berkshire into a giant.

Buy & hold – what’s not to like?

Berkshire was the holding company of an investing approach par excellence. Buy great businesses at a fair price, hold forever, reinvest dividends, job done.

The business had never paid a dividend or split the stock, which by that point had reached over $70k per (Class A) share. It had annual meetings in Omaha, its home town, which were already becoming a cult following.

There was also something about Warren Buffett’s penny pinching ways that appealed to me. He lived in his first house, he drove practically his original car. Part of his aversion to splitting the stock was the (tiny, in the scheme of things) cost of a stock split (though he did thankfully create the B shares in 1996, which are identical to A shares but a fraction of the price). He preached from the book of compound interest and his lectures were very compelling.

And yet

There was something sufficiently compelling about Berkshire Hathaway to me, as a baby FIREr back in 2000ish, that I named one of my assets after the business. That asset remains to this day, though it has sadly failed to prosper in line with the mighty BRK.

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Dec ’23 – 2023 in review

2024-01-022024-01-03 FIRE v London8 Comments

It’s the start of a calendar year. Let’s take a look at what 2023 did to me financially. I’m following the same structure I’ve used for the last few years (2022, 2021, and 2020). Overall, 2023 was a good year on almost all measures – thanks in particular to Q4 which saw the US stock market drag the year into a top quartile performance.

Q1 How did markets do?

First of all, what happened out there? Well, the year felt pretty ‘meh’ for the first nine months – as illustrated by my rather depressed blog post in mid October. But almost as soon as I hit Publish, the US market in particular led a dramatic recovery – reflecting a sharply improved outlook for inflation and interest rates. You can see below firstly the performance in December.

*December 2023 market returns, by geography and asset class*

Then we get to the year as a whole. Bonds rose by 3-5% across the board, but equities did strikingly better – particularly in the USA where the S&P500 rose around 26%. The UK equity market looks like the runt of the litter, which given the tech-driven nature of the uptick and the lack of UK tech wouldn’t be a big surprise. However it isn’t quite that simple, because the GBP rose against most currencies.

*2023 market returns, by geography and asset class*

Another way to look at the benchmarks is to look at the world equities (e.g. VWRL) and world bonds (e.g. AGG/BND or the UK’s IGLT). My portfolio has often pretty closely tracked the VWRL ETF. The graph below shows VWRL and IGLT’s share prices (but not dividends) for the year, showing the world equity bundle up (in GBP) 13.4% and the UK government bond index roughly flat.