Thursday, 14 September 2017

So, You Think You Know What You Are Doing? (Portfolio Sales)

http://www.adam-eason.com/wp-content/uploads/2015/12/Cognitive_Bias_Unconscious_Mind_Adam_Eason_Hypnotherapy_01-600x675.jpg
Source

Not much action on the DIY Income Investor portfolio recently, apart from a couple of sales (which I'll come to), meaning that there is a lot of cash sitting around idle...

But before I do any more investing, I need to check that I know what I am doing: I'm even less confident than I used to be.

Portfolio Performance


One reason for my lack of confidence is the (relatively) poor performance of the portfolio in 2017 - as of today it's showing only a 3% total return for the year. Given that the yield of the portfolio is around 6%, that means a net capital loss, which is disappointing. And the portfolio has lost two percentage points in September alone - probably mainly due to the fall in the value of the US Dollar.

Oh well, these ups and downs are part and parcel of investing and there is no need to panic - but rather to read and learn and try to do better.

Cognitive Bias

One of the most interesting pieces of work I have come across recently is the Cognitive Bias Survival Guide,  which, as it describes itself, helps us to 'manage the mind to help us make better decisions'. Have a look - it will be worth your time. ' Think of it as anti-virus software for the brain!'

Portfolio Sales

The DIY Income Investor portfolio has been quietly doing nothing much for months. Occasionally there is a little flurry of excitement. My 'sell' decisions are helped by a simple rule - when the capital gain reaches 5 times the annual income, I feel it is OK to sell. I don't always sell - I have some ETFs which I still continue to hold, on the basis that these are long-term investments that are chosen deliberately to reduce portfolio 'churn'.

The recent sales have been:
  • APF, Anglo Pacific (the share that 'keeps on giving'), which is a kind of play on mining activity via royalties. A recent price spike gave me the opportunity to sell a chunk for a 32% capital gain. I still hold some more with a still-attractive yield.
  • RSAB, RSA Insurance's 7 3/8% bond. I sold it on its recent rise, on the basis of the increasing UK inflation rate, netting another 32% capital gain.

These sales mean there is a total of nearly £100k to invest: I need to be very careful this time...


 [Sales prices: APF £1.4075; RSAB £1.4434]
 

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.

6 comments:

  1. How about Greencoat (UKW) ?
    This is trading at a premium, so you could keep your eye out for any dips - however in the medium term I can't see this share price falling much and it has a healthy 5% dividend yield.
    There's been much talk about the success of wind power in the UK and with nuclear power unlikely to feature much in our power mix, wind remains the best choice - even if we will still need back-up fossil fuel stations

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  2. Yes looks interesting and I like the focus on wind power. I once invested in a biogas company but that didn't do very well. Still, maybe one for my next round of purchases http://www.hl.co.uk/shares/shares-search-results/g/greencoat-uk-wind-plc-ordinary-shares

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  3. I would be grateful for any comments on this portfolio candidate

    http://www.hl.co.uk/shares/shares-search-results/e/empiric-student-property-plc-ordinary-1p

    It pays a dividend and has dipped 10%.

    I have some shares and I am contemplating more.

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  4. Don't let the cash burn a hole in your pocket - Treasury 1.75% 07/09/37 Gilts are selling well below par and at %1.75 make a very good FREE PARKING square

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  5. I hold UKW, FSFL and BSIF as an important part of my income portfolio, and see them as almost 'bond-like'.

    Interesting performance figures - exactly matching mine. I use the ASX as my benchmark and I'm up against that so I'm happy.

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  6. I bought British Land instead of more Empiric Student Property. I was scared to see the Empiric dividend coverge at 0.95.

    There has been some mention of British Land on this website but I'm not sure if the view is favourable. It has dipped 25% in 6 months, which attracted me to enter a position. I'd be grateful to hear from anyone who has chosen either to purhase BLND or not.

    ReplyDelete