After weeks in the investing doldrums, it's nice to wake up in the morning and see something happening with the DIY Income Investor portfolio: one of the bigger holdings has shot up by around 8%!
The new strategy of buying more Exchange Traded Funds (currently 43% of the portfolio) is working in one sense: not a lot of attention is required - but not in another: the price trends are slow (and at the moment not all that favourable, it has to be said).
So a bit of positive 'market action' has cheered me up a bit.
The big riser today is Berkeley Group (LSE:BKG), with the publication of its latest Annual Accounts. The profits of this up-market house builder are reported to have shot up in 2014 and their management have reiterated its very investor-friendly dividend policy.
I bought a bunch in early September 2014 and then topped up later in the month when the price sagged for no obvious reason - producing a compelling 7.8% yield, although I couldn't understand the reason for it at the time.
My 'sell' signal - for those readers who do not already know this by heart - is when the capital gain exceeds five times the forecast annual income. I have this set up in my portfolio spreadsheet, which I can update automatically at the click of a button. Today the indicator for BKG hit 5.5, telling me that it is OK to take a profit now. (I'm not saying that the price won't go up further - just that I allow myself to sell; otherwise I have to keep on holding.)
Selling these two fairly big holdings today (in different family accounts) has yielded a profit of around 40% in about 9 months - a performance I wish I could achieve more regularly!
This purchase and sale is almost a 'textbook' example of what the DIY Income Investor portfolio is all about: using high yield as an initial indicator for finding good companies (or fixed-income securities) when their prices are depressed (and thus their yields are high) and selling them when the price recovers.
Almost as simple as painting by numbers....
[Sale price: average ~£34]
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.