Wednesday 26 June 2013

Cruisin' (for a Bruisin'?)

It's not a fair fight, ref!
The financial markets are thrashing about at present, and I'm feeling fairly well pummelled, with the portfolio struggling - and failing - to keep above water over this second quarter of 2013. Investors seem to be trying to take profits (as I have) and find some kind of 'safe haven' for their money. The lesson of experience is that it is in these periods of turmoil that it is possible to pick up bargains - if you are lucky!

However, one of the tests of an investment approach is how stable it is: whether you can go off on holiday for a couple of weeks and not face financial ruin while you are away. Is your portfolio open to major market or security risks that actually need your constant attention?

I have written before about our family's choice of cruising for a holiday. When we set off for the Arctic (!) this year, I don't intend to be managing our portfolio of ISAs and SIPPs - in fact not even looking at them for a couple of weeks. So, am I cruisin' for a bruisin'? Will the market steam-roller me?

In some ways, the DIY Income Investor approach is like 'having your cake and eating it too'. If the price of a security in your portfolio goes up enough, you can sell it at a nice profit; if the price goes down - well you can still console yourself with the income. And as the market yield edges up, there may be more good opportunities for income-oriented purchases.

OK, there are flaws to this simplistic approach: but it suits my mental capacity for loss (and reward). Occasionally a holding will 'crash and burn' - and some will (reassuringly) recover a few years down the road. But there is no certainty in life and as long as you try to diversify sensibly, it should not be the end of your investing career.

This year's cruise is costing a bit more than last year, which was a bit of a fluke (put it down to Kairos). Still £50 per day per person seems remarkably cheap to me, considering that it includes: an endless supply of wonderful food, maid-serviced accommodation, day-long entertainment and a series of outstanding landscapes as we sail up the coast of Norway to Spitzbergen. What is more, the kids are enthusiastic because they know that they can do their own thing (safely - and this time in their own cabin!) - which is almost impossible to achieve on any other holiday we have suggested to them.

Last year I returned to a pleasing uptick in portfolio value; I doubt that this will be repeated this year. Currently the DIY Income Investor portfolio still has around 10% in cash. Some of the recent purchases have turned out to be premature, so I think it will be wise to leave that cash on the sidelines until the market settles down a bit.

That means that the main decision to make now is which books to take for the odd half-hour when there is not much to do on shore or on board. Suggestions for holiday reading are welcome.

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.


  1. Hi there,

    I'm an avid reader of your blog and have read your book too. Thank you for all the free information and thoughts!

    I'm also in a real point of not sure what to do right now. Most things are falling but then so are most of the markets too. I have some cash, but most is still invested and I am thinking this is a temporary down turn so will just "wait out the storm", so to speak.

    As for holiday reading, I just read this book: "The Hundred-Year-Old Man Who Climbed Out of the Window and Disappeared" and absolutley loved it!

    Have a great holiday!


  2. I think the market was way ahead of itself and that it is coming back to more normality. Many shares were bloated on the back of QE and that effect is now coming off.

    If you wanted to buy something and found it 10-20% cheaper that would normally make you happier, and this is how to look at this.... (unless you were just about to pay off your house or start a pension with your lump sum.

    You can use stop losses or limit orders to buy sell automatically whilst you are away and the dividends should keep tricking in.

    Enjoy your holiday, eat well and do some exercise. Various Lee Child books on the Kindle for my holiday reading. Will miss your blog!

  3. Hi DIY,

    Absolutely agree with Dave. Thanks for the book and all your great advice. Always look forward to your articles.
    My knowledge of bonds is weak so i'm ploughing through "The Sterling Bonds and Fixed Income handbook" by Mark Glowrey. ISBN 978-0857190420.

    Have a great vacation.


  4. Hi

    Just stumbled on your blog and think it is excellent. I have to as we have a very similar investment approach.

    One big difference is I have also built up a significant holding in residential property and I am curious as to why this is not a attractive asset class for you. I buy one bed flats in London all on yields net of expenses over 5.5%. Some on a offset mortgage so I can park my spare cash and get 4.5%. I went into this as a inflation hedge (borrow money and buy productive assets) or "buy something a central bank can't print".
    Main draw backs are it is more work than clicking a mouse and buying a block of shares and you can't buy in a tax shelter. Profits are taxed at 40% compared with 25% for dividends.
    With a conservative level of gearing still a solid long term Investment? (we intend never to sell till we pop out clogs)
    I am interested in your views.