Thursday, 10 April 2014

Spring Cleaning, Part Deux (Portfolio Sale)

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If you missed Part One - I am doing some major tidying-up on the DIY Income Investor portfolio by clearing out some investment 'dead wood'.

But the funny thing is: it's only 'major' in my head - the sales don't change anything in the portfolio, they just accept the paper losses incurred by bad decisions in the past.

Wednesday, 9 April 2014

Spring Cleaning (Portfolio Sale)

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It's that time of year: the sun is shining, the daffodils are flowering and we feel that, finally, the winter is over. Coming out of the dark, cold (and wet!) months gives us renewed energy to tackle those jobs that we have, perhaps, put off for too long.

Like cleaning up the dead undergrowth of the DIY Income Investor portfolio.

New Year's Resolution! (Portfolio Buy)

Keep Your New Year's Resolutions All Year
Ummm...
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A new Financial Year - a good time to make new resolutions to improve my investing style. But this is one that is a bit different - it's a new purchase, in fact. Actually, it's a re-purchase of an old favourite that has come back onto the high-yield radar.

Friday, 4 April 2014

Anchors Aweigh!

Gene: You gotta deal with those anchors!
Frank: Yeah...
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In the swirling blizzard of numbers that is the stock market it is often difficult to know which numbers are important.
Our ancient monkey brains deal with this by grabbing something that is thought to be known - and extrapolating from there: a bias called 'anchoring'. The problem is that there is often little connection between 'what we think we know' and the rapidly changing real world.

Thursday, 3 April 2014

It's All About the Yield (Portfolio Sale)

The runt of the litter?
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The DIY Income Investor portfolio is based - for better or worse - on yield; the ratio of the historic and forecast annual income that the security will produce relative to the purchase price. The underlying assumption is that higher yields indicate that the Market is wary of the securities for some reason: they are out-of-favour and potentially high risk.

Usually these companies survive, the Market upgrades their future potential and the value of the holding increases. Sometime the recovery does not happen and the holding joins the 'dog' pen.

Wednesday, 2 April 2014

Release the Dogs! (Portfolio Sale)

I'm sure he'll be OK out there...
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On an otherwise drab market morning one little ray of sunshine: one of my 'dogs' staggers to its legs and shows some sign of life.

Who am I to stop you - off you go, back to that big dog pound that is the LSE.

Buying a puppy is not just for Christmas! You're telling me. For nearly four years I've been giving this sad canine a home - but now it's time to show it the door.

2013/14 Performance - Review of Benchmarks

2013 QE Federal Reserve Taper Investment Portfolio Review
How's it looking back there?
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Times change - and so do markets. What worked as an investment strategy last year may not be so effective in the coming year.

One way of keeping up with the evolution of financial markets is to look at the pattern of benchmark performance. However, driving by looking at your rear-view mirror is not a recipe for success...

Tuesday, 1 April 2014

20% Gain = Happy Disposition?

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The results are in: the total return on the DIY Income Investor portfolio for the 'financial' year 2013/14 (I measure it as 1 April 2013/1 April 2014) is a sliver under one-fifth (19.5% to be precise). Not too shabby - but less than the near-30% in the previous year.

Still, it seems that I could have done better...

Tuesday, 25 March 2014

In The Saddle Again (Portfolio Buy)

From the horse's mouth
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As I have said several times before, to me the stock market is a lot like one of those slightly ramshackle funfair carousel rides: loud and colourful, with gold leaf decorated horses riding up and down on their poles, going round and round (yet getting nowhere). I like to think that I can ride one horse to the top and then jump off and cleverly hop onto another one that is just taking off. And what is more, I dream I can make a living from it!

The reality does not always fit the dream, of course - sometimes you fall off and sometimes the horse spins off, out of control. Sometimes the horse you think should be going up decides to stay put.

But the other similarity with the fairground ride is that the same horse comes around and around - and sometimes you get to ride it more than once...

Friday, 21 March 2014

How To Fool Yourself

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We are all a bundle of hundreds of hard-wired behavioural patterns that have successfully kept our genes alive since Adam underwent a bit of surgery. This means that our monkey brain decides to do many things without us really thinking about them: at best we rationalise an ex-post semi-logical explanation. I talk from experience.

Because we are generally unaware of there behavioural responses (or 'bias' to give them their more formal name), they are very powerful - and can be used against us quite successfully (think of any breed of salesman). At the very best, we can hope to recognise the patterns and adopt some kind of strategy to minimise their influence - because it's not like you can turn them off.