Investing philosophy – Page 2

My exits – a post mortem

2025-02-042025-02-09 FIRE v London10 Comments

Readers will know that I dabble with active investing – I pick stocks.

Lord, make me passive, but not yet

Rather like The Investor at Monevator, I firmly believe in the merits of low cost index tracking as an investment strategy, but I also enjoy the thrills / intellectual excitement of deviating from the true path.

Over the years I have owned dozens of ‘single line’ stocks. These days, partly due to my competing desire to reduce complexity, I have a rather simpler portfolio with ‘only’ around 25 single company holdings.

One question I have wondered about for a while is: what happened to those stocks I used to own, but have ‘exited’? Was I right to exit them? Are the stocks I continue to hold better than the ones I used to own?

A full analysis of this question is beyond the scope of my blog or, for that matter, my abilities.

But let’s start with Facebook.

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Oct ’24: Budgets & broad shoulders

2024-11-02 FIRE v London1 Comment

I haven’t seen much of London in October.

I’ve been away every weekend in October, partly in the UK and partly visiting friends overseas.

And now we’re in November, the clocks have gone back, but temperatures haven’t plummeted yet. London feels busy – pubs still have crowds outside.

Finally, the UK’s first Labour budget for 15 years

The big UK political/market news of the month was the new government’s mucn anticipated budget on 30th October. Monevator’s summary is excellent.

What Monevator doesn’t mention is how relentlessly gloomy the runup to the budget was. The government has been clear:

Taxes are going up, because despite electoral statements to the contrary, those naughty Tories left a ‘black hole’ which, despite numerous commenters pointing out before the election, the Labour highups hadn’t seen coming
but the key taxes (Income Tax, National Insurance, VAT, Corporation Tax) are not going up, and ‘working people’ (a phrase subject to amusing and relentless parsing in the pre budget runup) are not going to pay more tax
leaving those who are not ‘working people’ (implication – people with unearned income; they mean us, FIREees) and those with the ‘broadest shoulders’ to pay more tax. Capital gains tax was clearly going to rise, as well as potentially tightening of tax-free pension mechanisms. Non doms were a particular target, as are (those paying for) private schools. In a parallel government narrative universe, the government also was clear it is working to boost private sector investment and woo business – which somehow sounds different from ‘broad shoulders’ doesn’t it?

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Compounding, type II

2024-10-282024-10-28 FIRE v London1 Comment

Supposedly Albert Einstein called compounding the 8th wonder of the world. Certainly the wonder of compound annual growth rates is something I feel quite viscerally, the more so with each month that I track my portfolio. But I’ve been struck recently by a radical improvement in my portfolio’s dividend income, far in excess of the portfolio’s return, that has occurred thanks to the margin loans I’m using. For anybody curious about margin loans, this blog post shines a light on what’s happening.

While my portfolio has grown 14%…..

As a quick visit to my Monthly Returns page can see, my portfolio has returned around 20% over the last twelve months (to September 2024 inclusive). This is a good, but not exceptional period over the 10+ years I’ve been tracking my portfolio – which has returned just over 9% p.a. since inception over 10 years ago.

As it happens, despite the underlying returns of around 20% my own portfolio (and I’m excluding Mrs FvL’s in this analysis) has only grown in size by 14% over this twelve month period, thanks to some significant withdrawals to pay tax bills, make ‘off balance sheet’ investments, and such like.