Over the last few weeks we have considered our process. This last blog falls under the title ‘repeat, repeat, repeat’. I was discussing our process recently and mentioned that the day we stop innovating and challenging is the day that we stop as complacency will have taken over, and this has the potential to destroy all the work we have done. In July and August, I often breathe a sigh of relief. All the clients have agreed to the new portfolios and have been rebalanced into them. For two months I can effectively rest. In September I gear up to start the process again; hence ‘repeat, repeat, repeat’.
“The index fund is a most unlikely hero for the typical investor. It is no more (nor less) than a broadly diversified portfolio, typically run at rock-bottom costs, without the putative benefit of a brilliant, resourceful, and highly skilled portfolio manager. The index fund simply buys and holds the securities in a particular index, in proportion to their weight in the index. The concept is simplicity writ large.” ― John C. Bogle
The human suffering from COVID-19 has been in the news for over a month but until the last week the financial markets had not been materially affected. However, over the past two days markets have fallen substantially, with news of the spread of infections to Europe, especially Italy. It is not possible to know how serious and long lasting this will be. Often in the past, fears in the markets (including medical) have caused significant and rapid falls in prices but have been short term in duration.
I am often found locked away in a room, spending most of my life looking at spreadsheets, and talking to fund managers. About 70% of my time is spent working on the investment strategies. In the last blog we explored why we do what we do. We concluded that it is vital to retain this part of the process, that this is what we are paid for and we should devote our time and energy to it.
“The stock market is filled with individuals who know the price of everything, but the value of nothing.” Phillip Fisher When we started the business, we focused on investments; as we have developed, we placed greater emphasis on financial planning. We have produced a series of blogs expanding on the importance of goals and plans […]
“To expect the unexpected shows a thoroughly modern intellect” – Oscar Wilde I thought it might be fun to start by pulling out some of my thoughts from January 2019: Eurozone Crisis 2 – another Greek style crisis; there are no immediate signs of this happening Military action – we saw drone strikes by Iran […]
Frankly, I am bored! Referendums and elections, but nothing seems to have changed for the last three years. One certainty about this election is that that the outcome is uncertain; opinion polls will tell you one thing but as we have seen over the last couple of years, they have not been a good weather […]
My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard‘s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions, or individuals—who employ high-fee managers.
A key element of my job is meeting and talking to different investment managers. All managers will argue they are different but what really interests me is when a manager explains that short term noise is just that. If I asked people what the two key factors causing uncertainty in the world are, they would likely respond with Trade Wars and Brexit; the problem with this is that often we miss out on what is actually going on in the bigger picture.
At the turn of the century (well nearly 20 years ago) cash was a usable asset class. For those wanting to “safeguard” capital and receive an income it seemed the perfect choice; £100,000 could provide an “income” of around £5,000 per annum. In 2008/2009 this all changed as globally, interest rates dropped to near zero; […]
As fads and phases in markets and economies come and go, the smouldering wreckage of once hyped ‘must have’ investments often lie in a worthless crumpled heap next to people muttering. ‘But I really thought this time was different’ It rarely is!
George and I spend many hours discussing the politics and economics of the world, with reference to where and how to most productively employ capital. We try, in doing this, to separate the personal from the strategic, so what I will write is not necessarily my own view on what would be best or honourable but rather an analysis of what we currently see as likely to happen and why.
I have just returned from two weeks away on a Greek Island. Although we had Wi-Fi, I had decided before we left that I wouldn’t check emails nor would I engage with the news. The last time I did this was in 2011; I remember getting on the ferry back from France and reading that […]
“This will look like the maddest period of history” – Russell T Davies If you have watched the BBC Programme “Years and Years” you will be aware that it paints a rather bleak picture of how the future may play out. Starting in 2019, it travels over a period of ten years seeing the re-election […]
Neil Woodford is a star fund manager; at Invesco he ran several flagship funds and was the poster boy of the investment industry. As things appear to start to unravel it is worth perhaps just outlining the importance of research.
How many of us remember the events 2001 or 2008? Over the ten or so years since 2008, only in 2011 did we see a negative year through fears on the fragility of the global economy. In fact, over the last ten years it has been easy to forget that markets can go down, as well as up.
Two years ago, I was talking to a friend; the conversation went along the lines of, “2016 was good, but markets are going to fall so I am going to take my money out of the market and hold it in cash”. My friend then went on to explain that once the markets had reached the bottom, he would re-invest his money. I asked the question I always ask in these cases; what is the money for? He explained that the money was in a pension fund which he didn’t need and was planning to leave to his children.
The first quarter of 2019 started well with a significant rebound, after the sell-off in the last quarter of 2018. However, towards the end of March markets dropped backed slightly following weak economic data from Europe; in turn this fuelled concerns that we were closer to a global recession than the markets had priced in.
“Double, double, toil and trouble; fire burn and cauldron bubble” The expression “from hero to zero” springs to mind as I write this. At the start of 2018, the US Government was in shutdown unable to agree the budget, globally there were concerns over China, Trump, Brexit, trade wars, debt and a global recession. Although […]
a penny doubled every day for 31 days will be worth over £10 million at the end of the period Over the past few months I have produced several blogs looking at investing, market timing, and risk and volatility. To end this series I want to focus on the key message behind everything our financial […]