Wednesday, 20 August 2014

Nothing Ventured...(Portfolio Buy)

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Venture Capital Trusts (VCTs) are fairly exotic investment vehicles that offer tax incentives to invest in start-ups and unlisted companies, with the proviso that your money stays put for at least five years. However, VCTs have not interested me in the past, as - thanks to ISAs, SIPPs and tax allowances - I don't pay any tax on my investments and savings.

But what I didn't realise until recently is that you can also buy and sell shares in VCT companies - and some of these have really attractive yields.

Tuesday, 19 August 2014

Develop Your Spidey-Sense

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My son has captured a huge spider in our bathroom and has adopted it as a pet (naming it Shelob). Although this behaviour is more than a little questionable, it did get me thinking...

Spiders have provided us with inspiration for thousands of years: there is something about their painstaking work building (and rebuilding) a web and their seeming unlimited patience waiting for a victim to get caught up in it. (Robert the Bruce is the most famous example). They lurk, unseen most of the time - that is until they are caught in the open, unexpectedly.

So, can spiders teach us anything about investing?

Friday, 15 August 2014

HALP Yourself with Horizontal Thinking

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You've no doubt heard of lateral thinking but I do some of my best (?) thinking horizontally, lying on my bed looking at my laptop. Not good for posture, I know - perhaps that's why my back hurts?

But back to horizontal thinking: it's not like sitting at a desk, with so many distractions but rather it is almost Zen-like, as I can look at the trees out of the window. Almost day-dreaming - but allowing the subconscious to surface.

So, what does horizontal thinking tell us about the price of bonds?

Saturday, 9 August 2014

How Do You Buy Food?

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It may seem off on a tangent - but I think the way you buy your weekly food shop may say a lot about your investment style. Buying things to feed yourself - to grow or maintain your body - is an essential life-skill; so, I would argue, is buying investments to grow or maintain your wealth.

Maybe thinking about one facet of your lifestyle might help the other? Many people would probably consider my own food purchasing style quite eccentric - but then maybe that goes hand-in-hand with investing style.

Monday, 4 August 2014

Digital Detox - and the 'ETF Effect'

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DIY investors of all flavours probably find it difficult not to check the latest prices of their investments - I know I have that problem. Most mornings I sit in bed, on my laptop, and wait for the London market to open - or more accurately, I wait for 30 minutes after the market opens, given the delay that is inherent with free-of-charge market data.

So, the annual holidays - being out of touch for weeks on end (this year, 12 days on a cruise around the British Isles) - is a bit of a challenge to this probably slightly compulsive behaviour. But being out of touch is like a digital detox - for a data junkie.

Saturday, 5 July 2014

The 'Reverse Bubble' (Portfolio Sale)

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One of our human investing behavioural biases is the fear that a paper gain we have made on an investment will suddenly be snatched away. This bias leads us to sell winners 'too soon'. Of course, the difficulty is identifying 'too soon' - I haven't yet found anyone putting forward a coherent strategy for when to sell, other than 'not too soon'.

My own observation is that the high-yield securities I aim to buy tend to behave a little differently to the run-of-the-mill 'value' shares. Not all high-yield is 'value', of course - the skill lies in sorting out the fatally flawed from the temporarily disabled. A high yield opportunity often exists primarily because of a perception of risk that is subsequently proved to be overly pessimistic. In other words, it is like a 'reverse bubble': once it pops, the price returns to 'normal' levels.

Friday, 4 July 2014

On Doubling Up (Portfolio Buy)


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The dividend shares I buy. as well as being 'high yield' are usually 'value' shares, in the sense that their price compares favourably with their earnings and book value - and they don't have too much debt. The market will be worried about something else about the company - hence the high yield.

It may be hubris, but when one of my 'chosen ones' falls in value, and this is for no apparent good reason, I often consider 'doubling up' - buying more on the price drop in the hope that the price will quickly rise again. This is obviously putting myself at odds with Mr Market (but then that's what I do a lot) - but it seems to work, more often than not.

So, when should you think about doubling up?

Tuesday, 1 July 2014

More ETFs (Portfolio Buys)

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With an average yield of (now) 6%, the DIY Income Investor portfolio is throwing off cash at a satisfying rate. Add to this the sale of both profitable and unprofitable investments and the portfolio hit a substantial cash glut over the last few weeks.

I don't like holding cash in an investment account, as it just sits there, lazing around figuratively watching the Footie or Wimbledon, rather than earning its keep, like it's supposed to. Personally, I can't wait until I can access Ratesetter's peer-to-peer lending rates from inside an ISA (now the New ISA or NISA) or SIPP.

Until then I need to keep looking for better uses for the cash - and the long-term strategy says 'buy ETFs when the yields are attractive'.

Monday, 30 June 2014

London's Juicy Bond ETFs

It's all about the juice...
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I'm always on the hunt for interesting Exchange Traded Funds (ETFs). Not just any, of course, but specifically high-yield and preferably geographically diversified. What is slightly surprising to me (given the wealth of data available) is that these are not so easy to find - there does not seem to be a comprehensive list that is ranked by yield.

I recently looked at high-yield dividend ETFs. Today I'm specifically looking for fixed-income ETFs quoted on the London Stock Exchange. So here goes with some more real-life Do It Yourself investing...

Sunday, 29 June 2014

Update on the ETF Strategy (Portfolio Buy)

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Regular readers may be aware that I am trying to increase the proportion of Exchange Traded Fund (ETF) holdings in the DIY Income Investor portfolio. With recent sales and this latest purchase (see below), they account for 30% of the portfolio - but I'd like to buy more.

So why am I a fan - and why am I buying some and selling others?