Performance Report – August 2017

Another good month. Top performers have been Glencore (Glen), Sports Direct (SPD) and quite a nice recovery from Next (NXT)

Total shares plus cash in the ISA now stands at £207,649. That is a 38.4% simple return since the start of the project which is 18 months in now bar a few days. Year to date – six months in I am running at an annualised rate of just over 26%. That is a good performance but still fairly short of the 40% overall required to hit my target in 5 years. Any shortfall in the early years gets compounded so the 40% goes up significantly.

I’m actually torn about the time limit on the target. I don’t really want to encourage reckless gambling in myself or others just to hit some arbitrary time limit. If this takes 10 years it frankly doesn’t matter so it is really just a reference point.

So Where is the market going and how does the private investor adapt?

Donald Trump is still in the White House, although it must be quite lonely in there at the moment seeing how everyone else has left. Brexit is still happening, although I suspect that the duped leave voters might secretly want a re-vote. North Korea hasn’t actually launched a missile but is on a knife edge. The EU still has the problem of Greece – they haven’t magically grown a new economy with lots of tax payers. Russia is still in the Crimea – remember that one? Banks are holding too much capital due to the wrong type of regulation which means they aren’t lending to small businesses, which mean low or no economic growth. The Oil price has not recovered as I predicted and is stuck in a 45-50 $ barrel range.

So can anyone tell me why the stock market (particularly in the U.S.) is hitting all time highs?


So it’s been a much better quarter than the last one. I’ve made good profits (£18,282). But have I managed that because the market is too high? I’d like to think it is because I have picked relatively few, good stocks and stuck with them, proving myself at least a competent if not yet good investor- but when the top comes off the mountain I guess we’ll see.

More and more I feel that the U.S market in particular is heading for a correction. In the meantime it is steaming ahead and I don’t want to miss out. So do I move more into cash or do I ride the wave for a bit longer?

There was a research guy at a bank I knew in the early 2000’s who told me around 2002 that the credit markets were going to meltdown. Every year in the ensuing boom he said the same thing – this year the market is going to “puke” as he put it. Eventually in 2007, the market “puked” at which point he said he’d told me so.

It’s fine being a bear – but if you are short too early – in this case 5 years too early, you miss out on the upside. If I say there is going to be a stock market meltdown for long enough, eventually I will be correct.

The range of advice on this point is wide. On one hand you will get the value investors saying you shouldn’t try to time the market – buy good quality companies at a good value and wait. On the other hand are the chartists – completely driven by what is happening here and now and following the herd.

Whereas by nature I’m a value investor, the market feels over-bought – so my search for good value companies is coming up against my view of the overall economic environment – making it hard to find new investments that I believe in.

I’d love to hear your views