2021 review, via seven questions

This, my annual review for 2021, somehow was overlooked in January. But better late than never, let’s ensure 2021 is not forgotten – it was a rather extraordinary year.

2021 was the 9th year that I’ve been tracking my portfolio (reasonably) rigorously, every month.

Following the format I used last year, I’m setting out here to tackle seven generic questions that I think all prudent investors should ask themselves at least annually.

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The market’s in freefall: what should I do?

Last week was the worst week since, well, a very nasty week quite a long time ago. And this week has started even worse. We are now officially into S&P correction territory.

Jeremy Grantham types (thank you @Monevator for the link) will tell you this wolf has been lurking just around the corner and we had it coming.

Typical, really. Just after I have leveraged up. And published a piece about ‘feeling rich’. Maybe I caused the global stock market drop, through sheer hubris? Just to compound the sense of nemesis , I am about 3% overweight on USA equities going into this correction.

When is a fall a fall?

Mind you, the fall has barely started. Jeremy Grantham describes how these corrections start with the riskiest stuff. Maybe that is why, until today, FTSE hadn’t moved yet.

In fact my portfolio – and its graveyard – are full of surprises.

I have a few ‘spec tech’ holdings that are down over 30% – e.g. HUBS, DOCU, ESTC. So is Homeserve, though Homeserve’s decline pre-dates the recent woes by several months.

And my big tech is down materially – Amazon down to $2800, MSFT, GOOG and so on down 12-15%. Not nearly as big a drop as the ‘spec tech’ but more impactful to my portfolio due to my substantial holdings in a couple of these.

Key indices, and a sample ‘spec tech’ stock, performance year to date

But, reflecting FTSE remaining at 7300+, some stocks I gave up on a while ago though are doing OK – HSBC is above £5, and Shell is above £20.

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Buying a 2nd home for nothing

A Coastal Folly

One thing has, after all, led to another. Against many years of better judgement, Mrs FvL and I have taken the plunge and bought a second home on the UK’s south coast. Our Coastal Folly.

This blog post tells the story of how I’ve paid for the Coastal Folly. I’ve surprised even myself with how it’s happened.

The Coastal Folly is expensive. Well over £2m of property. It is not a little 2 bed cottage 20 minutes drive from the sea. It is a premium piece of real estate, with uninterruptible sea views.

As a second home, it attracts additional stamp duty (the property transaction tax payable in cash to the government at completion) – for this value of property my stamp duty is well over 10%. A lot of people I know froth at the mouth at this level of stamp duty. Not me. My portfolio has benefited from low investment taxes. And most of what I spend my money on incurs 20% VAT. So having to shell out 12-13% purchase tax on a discretionary purchase, using money that has been taxed at 0% or 20%, doesn’t feel unreasonable at all to me.

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