April 2021 Investment Review

Risk is universal. If it’s not one type of risk it’s another. Fear of investing in case you lose out – versus – Fear of missing out by not investing. It’s very much like the Push-you-pull-me from Dr. Dolittle.

Our investors leave this “should they or shouldn’t they” to us. It’s up to me to go and have a quiet word with myself. So what am I looking for?

Indicators

I’m a constant observer of what other investors are doing. It has become more difficult recently as the long-term balance has been upset by the number of short term speculators distorting the markets. The get-rich quick gang. So at times like this, it makes sense to watch what those speculators are watching. Bitcoin.

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January 2021 Investment Review

2020 ended up being the most difficult investment period I can remember in my 33 year career. I could be wrong, as you do tend to remember only the good times and conveniently forget the bad. Both 2011/12 and 2018/19 were years where we lost some of our profits, so the difficult conditions encountered last year were eased by the fact “this wasn’t our first rodeo”.

That said 3 of our portfolios actually ended the year in profit whilst the other two ended broadly level. It seemed like a huge amount of work for very little return.

The scores on the doors.

Portfolio1 Year %Max Drop in March %
Cautious-0.01%38.24%
Moderate3.81%28.45%
Adventurous-0.30%40.41%
AIM2.57%46.28%
Go For Growth20.86%55.31%
FTSE 100-14.34%*33.99%
FTSE 250-6.38%*41.37%
Interestingly trying to be safe by holding a much higher percentage of a portfolio in cash, still resulted in our Cautious Portfolio falling almost as far as our Aggressive Portfolio. This is due to the mandated higher percentage holding in “lower risk” property shares and the inability to hold smaller shares higher up the risk scale. We manage very little for Cautious clients and have not taken onboard any new clients we have classified as Cautious for 7 years now. * Some dividends were also still paid on top in 2020, but these were very limited.
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Testing Times

These are testing times. I’ve talked before about my feelings of anger in What Next! and Charlie countered that emotion with her blog entitled Finding Joy. Thankfully this blog isn’t going to be about coronavirus testing at all, even though Bolton seems to have become notorious as a party town, inhabited by gangs of soap dodgers.

No the testing I’m referring to is the daily test we are being subjected to as investors. Everyday, another UK company makes thousands of individuals redundant and declares as upbeat an earnings call as they can. We have seen a gradual fall in the value of our savings over the last few months as it has become clear that the recovery has been kicked down the road somewhat. This year may even turn into a reprieve from death row for countless turkeys.

The Behaviour Gap

The graphic above is what I look to when I get sidetracked. It’s OK to worry and speculate over what could happen but there’s no point really. We need to focus on those things that matter which also lie within our control. It was given to me by Carl Richards when I attended one of his workshops. His financial graphics are powerful stuff.

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