Fiscal Year End

In a week or so we will all be in the new tax year. Let’s take a look at how the last one played out for us as investors.

Although it has been 5 years or so since I watched a single game of football (no World Cup, no Euros, no Manchester United) I thought I would add a football theme to this performance blog. Like football, investment can be tedious at times and stretch our patience, but then there are moments of magic too. Let’s hope the current magic continues.

Football verses Soccer

Although I haven’t watched a game of soccer (US speak for football) I have watched many games of football (US speak for American football). If only the Yanks would speak English, it would make understanding much easier. Language difficulties are not just linked to sport. In investment we have shares they have stocks, we have gilts they have treasuries, we have bonds and they have….bonds. OK there are some similarities too.

I love the strategy behind football (I’ve started so I will stick with it), I like the concept that the two teams never meet. Unlike in soccer , where the same 11 players of the first team play the 11 players of the opposing team. Striker can tackle striker and defender can tackle defender. In football there are two teams and special teams too. Star quarterback never goes up against the opposing teams star quarterback. The offensive team is met by a defensive opposition, and vice versa. 11 players on, 11 players off when the tide turns. Talk about parking the bus, in football they bring on guys the size of a tranny van and then park a second set of vehicles behind that row.

Individual team members are chosen because;

  • They can throw a ball, but not necessarily catch one well.
  • Catch a ball, but probably couldn’t throw well.
  • Run fast.
  • Dodge.
  • Block.
  • Kick.
  • Think.
  • Be thoughtless.

There are parallels to be had in investing. Defensive shares versus growth shares for instance; there is a time in the game to choose one or the other or both. The list above is a proxy for asset allocation in investment. But I’ll be honest, I just love all of the football stats.

Continue reading “Fiscal Year End”

As February Ends

Rebalance

As promised, albeit a little later than hoped, here’s a little commentary behind the recent rebalances of our main portfolios held on the Transact platform.

Inflation

As investors, our world changed at the beginning of 2022 as the rate of inflation ran rampant and central banks endeavoured to control inflation with aggressive interest rate rises. Equity markets plummeted. It seems like the easy yards have now been gained with inflation in the UK back from 11% to 4% now. Getting the rate of inflation down from here and back to the 2% per annum target will be a stickier proposition. More importantly other nations, including the US now have inflation in the low 3’s, so the UK should fall back in line within the next month or two.

As interest rates rose a safe cash return seemed like a much less risky proposition than shares. However change is finally afoot.

Opportunities & Risks

The eyes of investors are focused on five main opportunities and risks

Continue reading “As February Ends”

2024 Begins

Happy New Year!

Before we look ahead to this new year, let’s look back at what we all went through in 2023. It was really quite a lot!

January

  • China opens borders, ending zero-COVID policy.
  • Almost three million people were infected with COVID-19 over the Christmas period
  • Microsoft invests $10B into OpenAI, extending their partnership.
  • UK Inflation starts the year at 10.5%

February

  • Chinese “Spy Balloon” drifts over the Americas.
  • The original 4 day Russian invasion of Ukraine has now lasted 365 days.
  • Russia suspends participation in nuclear arma reduction treaty.
  • The Bank of England raise interest rates from 3.5% to 4%.
  • US interest rates rise to 4.75%
  • A milder winter across Europe ensures gas reserves do not run out as feared.
  • An estimated 475,000 workers go on strike, the single biggest day of industrial action for more than a decade, 

March

  • Silicon Valley Bank and other regional US banks collapse causing banking turmoil.
  • The Bank of England announces that the UK arm of Silicon Valley Bank is to enter insolvency, following the demise of its US parent, the largest banking collapse since the 2007/8 financial crisis. Many UK tech startups are prevented from accessing cash to pay staff
  • UBS buys collapsing Credit Suisse for $3.2B
  • BOE base rate rises to 4.25%
  • US interest rates reach 5%
Continue reading “2024 Begins”