Thursday 27 November 2014

DIY Recovery - and a Sale

'Recovery' in two senses - both a resurgence in the value of the DIY Income Investor portfolio as well as the digital retrieval of portfolio data from a failed laptop hard drive. In one sense the two are linked - without being able to recover the data, I wouldn't be able to easily recreate the portfolio's history.

But the current recovery trend of the portfolio means that I can discard the self-imposed 'ostrich' mode of the last month or so, to begin trading a little.

The laptop failure was probably the motherboard. A bit of poking around and research on-line meant that I was able to extract the hard drive, connect it to the USBs of another computer and successfully copy the data on it. DIY recovery. (The moral is simple: back-up and back-up again - it is easy to forget how much we rely on electronic media these days.)

Once the vital spreadsheet had been recovered, it was possible to catch up on the progress of the DIY Income Investor portfolio (made up, you may recall of family ISAs and SIPPs). It is currently hitting new highs in total return valuation. As of today, the 2014 growth in total value is over 13% - not terribly impressive by comparison with previous years but at least it comfortably exceeds my top cash return (of around 6%). I doubt that many investors are doing a lot better: certainly the various FTSE indices aren't!

Part of the reason for this recovery has been a bit of good news on Friends Life Group (which used to be called Resolution). I bought FLG, again (after selling it previously at a nice profit), in April 2014, mainly due to the high yield and fairly positive annual report. It was admittedly a bit of a gamble but it has paid off, as giant insurer Aviva has announced plans to buy them.

I do have a 'sell' rule, to try to make sure I don't sell too early. This compares the capital gain with the annual income: I usually wait for the gain to reach the equivalent of 5 years income. In this case it didn't quite hit my target but I decided:
  • the takeover news is now priced in
  • Aviva shareholders don't like it
  • the Aviva shares (the mechanism for purchase) will not provide such a high yield as at present
  • the capital gain (over 7 months) is 32%
  • I'm bored
(The last point is not really justifiable - but there it is.)

Now, (head lifting out of the sand)  - what's interesting out there...

[Sale price:£3,677]

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,

    Just curious,why do you use the rule "wait for the gain to reach the equivalent of 5 years income"?


    1. Hi HumbleBlogger

      This rule is discussed in several previous posts, but basically it is a way to discourage me from selling too early - humans are programmed with a lot of biases, including loss aversion. The figure of 5 years is arbitrary but works for me...