It’s the end of the second quarter. That means it’s time for my usual monthly portfolio performance along with a quarterly review of how 2017 is progressing.
June’s news was dominated by the UK’s general election. To my mind the electorate called it about right. Under the UK’s first-past-the-post constituency system no voters have a say on the overall leadership, but nonetheless the overall outcome often reflects the wider mood of the nation with uncanny fidelity. That’s what seemed to happen here: the Tories were badly led down by their leader, and Corbyn’s Labour offered a genuine and, to many, welcome alternative. Yet at the end of the day the Tories remain in power, with an extremely short leash and an exploding collar.
The other news in June, which if you blinked you might have missed it, was the central banks publicly stuttering about the next policy move. This unsettled UK and USA markets noticably, but it seems to have lasted less than a week. From the point of view of my process however this was material; the pound gained about 3% culminating in it reaching $1.32 at exactly the end of the month (see graph). Even as I write this, a few days later, the pound has reverted – but as I took my portfolio snapshot on 30 June my quarter-end numbers were pretty different.
Even a week before the end of June I was having a positive month. But thanks to the pound blipping upwards at the last minute, and most of my portfolio being overseas at this point, I recorded a negative month. If the pound remains at the level it’s already returned to, then I am highly likely to post a positive July.
One of my readers, Peter, liked my post (or its readers’ comments, more to the point!) about Jane and her £10m quality problem. He’s shared with me his attempt to find a new IFA. Below is his initial introduction email, suitably anonymised, to an IFA he’s been intro’d to.
Peter is very well informed about FIRE. He’s thoughtful and articulate, and lays out a pretty clear strategy.
I’d love comments on this blog about what you think of his approach. I will comment myself, below this post.
In the meantime, it’s over to Peter.
Below is a summary of my situation. I’d be interested to hear how you could help.
- I am 39 years old
- 4 children (all under the age of 10)
- I am not (yet) married
- I am UK domiciled and resident
My work background:
I have been an entrepreneur for well over 10 years.
My investment history over the last 5 years
When I had my big ‘pay day’ from my first business a few years ago, I immediately bought lots of property. Mostly residential. Total deployed was just under £8m in/around London.
At the time, I knew zero about ‘conventional’ investing. “Sharks trying to sell me something I don’t understand”, etc was how I saw it. Thankfully I didn’t fall into the trap of immediately putting it all into an offshore bond and all into high-fee funds (as suggested by the private bank who was trying to become my new best friend back then…)
I did what a lot of people do when they have zero understanding of ‘conventional’ investing and turn to property. The (flawed) logic being “you can touch it”, easy to understand it (or so I thought), you can gear it up with debt to accelerate gains, “you can’t lose in property”, etc.
Fast forward a few years and to cut a long story, I absolutely hate being a landlord. Even with a competent property management company, it’s a constant head ache, so many hidden fees which lower the return, ongoing damage to property, constant management required, a big time sink, etc.
I hate being a landlord so much, that I’ve taken the decision to sell everything (apart from my principal residence, which is debt-free but has significant running costs). Not only do I not want to be a landlord, but I also don’t want to own the assets long term. I don’t want to be trapped in the assets if I change my mind at a late date and there are large inflation-linked gains with CGT due on switching, etc…
So what now?
The punning opportunities last month are almost behind us.
In fact election polls have suggested that even May might be behind us. The Prime Minister that is. If she ends up with a reduced majority, or even just a marginally higher majority, then she’ll have the Tory attack dogs at her heels in no time.
The big news in geo politics was Macron winning the French Presidential election. Markets had mostly priced this in, but the Euro climbed slightly and the Eurozone equity markets rose over 2% too. Over two months a Brit investing GBP in Eurozone equities has returned almost 10%, including currency movements.
In the meantime, with Labour’s goalkeeper being almost absent from the pitch, Theresa ‘week and wobbly’ May has suddenly looked like she could even miss an open goal. Markets have marked the pound down. For FTSE-100 this has been a bonus, as it has heavy exposure to the Eurozone, so FTSE-100 is up 4.4% on the month, reaching record highs.
In other news Australian equities continued their slide. And Fixed Income had a slow and steady month – as it often does.