I took the summer off of investing. I read a lot about investing but managed to play with my spread betting account of about £2k whilst leaving the main ISA account alone. Just like magic, without my interference, the ISA went up. Total is now just shy of £170k. Glencore, my long term bet is just shy of £2 (although I did keep my May 2016 promise and sell half when it hit 170p again, I am holding the rest for a while now.
One of the best books I’ve read over the summer is The Warren Buffet Way by Robert Hagstrom. If I can try my own amateur summary I’d say the main rules to investing like Buffet are:
1. Is the business understandable and has it performed in the past? Is there anything negative which would prevent it doing the same in the future?
2. Do the Management do what they say they are going to do, in the interests of the shareholders?
3. Is there a “margin of safety” (concept from Benjamin Graham, Buffet’s mentor) in the purchase price
4. Put up with short term volatility for long term gain – i.e. don’t keep selling your positions when they go up a little bit or down a little bit (or even more than a bit). Make a rational decision and then to a large extent ignore the investment – come back and check on it in a few months.
On that last point I have found my spread betting account worth its weight in gold. I have spent hours and hours messing around on it, taking positions in all sorts of macro economic instruments. Sum total of all that effort is about £100 loss – i.e. nothing – so ostensibly a waste of time – EXCEPT – it has meant I have been better able to resist the temptation to over-trade my ISA.
The one thing I did do since my last post was to sell a reasonable chunk of my ISA holdings before the Brexit vote, and then buy the same holdings back 2 days after the vote. Getting into cash was the only hedge I could think of that didn’t have so much basis risk as to be a waste of time. So that worked out well for my portfolio, although whether it works out well for the UK long term we will have to wait and see.