Tuesday, 25 March 2014

In The Saddle Again (Portfolio Buy)

From the horse's mouth
Source
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

Source

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.

Wednesday, 19 March 2014

Family Planning

Stylized illustration of parents with two children as red figures.
Source

Regular readers may be aware that I have developed a new comprehensive approach designed to deal with eventual inheritance issues. This is not my favourite subject, as it deals with something that I won't be around to enjoy, but is a necessary part of modern family financial planning.

One element of this was investing in SIPPs for my kids. Here's an update...

Thursday, 6 March 2014

Exit Aviva (Portfolio Sale)

What are you waiting for?
Source
One of our key monkey-brain investing weaknesses is loss aversion: behavioural tests show that this bias consistently causes us to make poor financial decisions.

I am not immune from this bias and I continue to try to find a way to deal with it - a way that 'goes with the grain' of my mental make-up rather than using sheer logical willpower.

However, for now the DIY Income Investor approach is just to hold on to losers in the optimistic hope that they will eventually come good.

Sometimes this works...

Wednesday, 5 March 2014

Looking for Trouble in Emerging Markets (Portfolio Buy)

Source
For better or worse, the DIY Income Investor portfolio has a big bet on Emerging Markets.

However, 'Emerging Markets' is a real rag-bag of a label, including diverse states such as the BRIC and MINT countries as well as dozens of smaller administrations.

It's time for a review: is this reckless madness or inspired opportunism?

Carry On Carillion! (Portfolio Sale)

Source
Ooh Matron! What's going on here?

We humble DIYers can only (figuratively) fumble in the dark on the Stock Market, compared with the 'big boys' who have millions to spend on research and modelling company financial data. By contrast, the most we can hope to do is to watch the price trend and (hopefully) catch any important RNS news bulletins.

But when a company publishes generally poor results and the share price spikes up - it's probably time to say: Wham Bam Thank You Ma'am.