Loans: what can possibly go wrong?

Just over a year ago, an unusual opportunity arose.  A friend asked if I might be up for lending his small property development company some money.  I ended up going ahead with it.  What happened? What lessons can I learn?  I’ll share the former, hoping my readers can help me with the latter.

Who was the borrower?

The loan was to a small private company doing real estate development. Basically they buy buildings in London where they believe they can get planning permission to increase the number of dwellings; they then maximise the planning potential of the buildings, do the work themselves, and sell on the units. They’ve got a few years’ successful track record.

I have known the three principals for over twenty years; one of them is a very close friend of mine, admittedly one who has radically different approaches to FIRE/money/investing.

What were the terms?

I reached agreement as follows: Read the rest of this entry »


2018’s goals and January 2018’s returns

So, my normal blogging rhythm has been slowing down a bit.  Time for a quick catch-up.

January’s come and gone, and I haven’t even written up my investing goals for the year.

First of all, what’s been going on in January?

The Trump tax cuts may have technically been passed in December but it feels as if markets in January have been dominated by them.  I confess to being surprised, and pleased, to see a variety of US businesses committing to pass through some of the tax cuts to their employees – e.g. Walmart, Boeing, JP Morgan, AT&T, Disney, Home Depot and others.  This all looks quite positive for US stocks, the US economy, and probably thus world trade.

It is thus not too surprising that world equities are up, and the US dollar has fallen over 5% vs the pound.  Surely a good month to be in the UK?  Alas not, as FTSE has fallen over 2% while S&P is up over 5%.  Brits have been better holding S&P than FTSE, not for the first time.

2018 01 FvL markets

Read the rest of this entry »

2017 Q4 review: top trumps?

It’s the end of the final quarter. More importantly for me, it’s also the end of the fifth year of my portfolio tracking. In the world of asset management, once your track record has five years you are getting on the map.  So how are we looking?

How was December?

Well, starting with December, what happened?  Equities had a good month – particularly the UK where FTSE-100 rallied in the closing days with a fine Santa Rally.  There wasn’t much to report on forex or bonds.  In constant currencies, the markets I’m in rose by 2.85%; currencies then added a 0.2% tailwind, so the blended market average for my portfolio was a gain of 3.0%.  A good month to be in the markets.

2017 12 FvL Market returns

Against a market gain of 3%, December looks actually quite disappointing for me.  My portfolio rose ‘only’ 1.7%.  Why the lag?  I’m not sure; it may be a clerical error because it was all in one of my accounts, but I haven’t had a chance to drill into it. I’m still not complaining about a monthly gain of 1.7%.

How was the full year?

Looking at the wider market during 2017, it has been a very good year for investors.

Read the rest of this entry »