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Diary of a Dumb Investor: Call me Mitt Romney

I’ve just bought shares on the cheap in RIT Capital Partners, Lord Rothschild’s investment trust, and am feeling pretty pleased with myself.

 
Diary of a Dumb Investor: Call me Mitt Romney

We are as clouds that veil the midnight moon;
How restlessly they speed, and gleam, and quiver,
Streaking the darkness radiantly! – yet soon
Night closes round, and they are lost for ever

That’s some Percy Bysshe Shelley for anyone out there who’s not a Romantics buff, or didn’t spend their time at uni weeping into poetry books. It’s from a poem called Mutability – a word that describes my behaviour as an investor of late.

Read Dumb Investor: the story so far

My recent moves have been, in order of execution: buying BP (BP.L) shares; shorting France with a leveraged exchange traded fund (ETF); and buying shares in Lord Rothschild’s investment trust, RIT Capital Partners .

Now although I admit I’ve been inconsistent in my strategy, there has been an underlying logic to the positions along the way. BP was a hedge against rising oil prices and a possible war in the Middle East; the ETF was a bet – that paid off – on Sarkozy falling back in the French election; and the trust, well, I’ll come to that in a bit.

Still, it is fair to brand me a quivering cloud, like in the poem, or a flip-flopping Etch a Sketch like the US presidential hopeful Mitt Romney – or so his opponents would have us believe.

Romney, a former private equity mogul with great hair, has been accused of moulding his principles to fit his political goals, erasing previous positions much like the mechanical drawing toy that children shake for the image to vanish.

Were it to be true, some would call such conduct fickle; I see it as pragmatic. And I can certainly identify with it, having dumped a load of my holdings at the beginning of the year (most of my best stuff) in an unfortunately timed bid to start 2012 with a blank slate.

Now, while that was foolish – it really irks me to see how much Afren (AFRE.L) and Jupiter European Opportunities have rallied since I exited – my latest piece of flip floppery is rather clever, I think.

Last week, I said I wanted to short someone else, after my punt against the French worked out so well. But while casting my eye about for an another instrument as esoteric as the ETF to buy, I noticed the Rothschild trust in a news story about the sale of some privately held oil company, from which it should make about £72 million.

Where I stood on Monday: Click to enlarge

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22 comments so far. Why not have your say?

sgjhaghsdg

Apr 30, 2012 at 12:35

RIT is well worth tucking into your portfolio and then ignoring for a decade or so.

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dennis rooke

Apr 30, 2012 at 13:06

I am not sure about RIT while Rothschild son is involved he has certainly made money for himself but is involved in all sorts of investments which if taken up by RIT changes the solid nature of the trust, maybe thats why the discount with respect to the recent profit taken a deal this only offsets some previous valuation losses last year. Long term hold possible but not as gold plated as before

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Maverick

Apr 30, 2012 at 15:06

Diversification schmiversification . . . . You should have put the £1,000 in Aberdeen New Thai or F&C Global Smaller Companies - they have a far better track record. Or indeed swallowed your pride and bought Jupiter European Opportunities again.

Private equity trusts are not doing well at the moment - have you not noticed? Just buying something because you don't have any of it in your portfolio is truly dumb.

Why do you have no exposure to British engineering companies? Bodycote, Melrose, or John Wood Group, for example. Do you just look at what everyone else is doing (Lloyds, BP, Personal Assets), or do you do your own research?

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Maverick

Apr 30, 2012 at 15:19

"Yet soon

Night closes round, and they are lost for ever."

I don't think much of that. Try this :

"Come, my friends.

'Tis not too late to seek a newer world.

. . . . for my purpose holds

To sail beyond the sunset, and the baths

Of all the western stars, until I die."

That's Tennyson's "Ulysses".

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Anthony Tinslay

Apr 30, 2012 at 16:30

I certainly would not knock you buying RCP - I have an interest myself. However I do hope you realise that you cannot expect much by way of dividends and have read in depth the last two years Annual Report & Accounts and clearly understand quite what you are now involved with. Since you have spotted a certain potentially favourable article, others will have done so and any benefit is therefore likely to be in the price

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AA

Apr 30, 2012 at 17:05

NAV and discount of RCP is only accurate on the day NAV is published usually once a month. So purchase at a "discount" as opposed to premium is an inaccurate statement.

I have off-loaded half my holdings last month as RCP is either going south or nowhere for the past three years!

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gggggg hjhjkl;'

Apr 30, 2012 at 17:41

Di your actions interest me greatly!!

None of them match anything I do or have ever done in investing terms

Based on your actions so far, I find that very,very comforting.

Should I find myself agreeing with you then I would be very,very worried indeed.

Will you ever act in a coordinated way, with a strategy and clear objective I wonder.

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JohnW

Apr 30, 2012 at 18:10

"My name is Ozymandias, King of Kings:

Look on my works, ye Mighty, and despair!"

A bit more Percy Bysshe Shelley :-)

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Maverick

Apr 30, 2012 at 18:21

Or, perhaps even more appropriate :

"'Twas brillig, and the slithy toves

Did gyre and gimble in the wabe:

All mimsy were the borogoves,

And the mome raths outgrabe."

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Bernard Bedford

Apr 30, 2012 at 18:49

According to Bestinvest the Z score is -2.04 suggesting good value at the current price.3 year performance is weak but this is a long term hold that doesn't chase the market. see Jeremy Grantham's latest quarterly letter on the GMO website.

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Daniel Garcia via mobile

Apr 30, 2012 at 19:01

I'm a novice but I song understand your strategy.

Mine's to build a base portfolio of global equities to hold for 30+ years, and once built to expand out into bonds, infrastructure and commodity funds.

I currently hold a Eurostoxx 50 tracker, Jpm Indian IT and blackrock latin america. Next on my list are ftse 100 and 250 trackers, a s&p 500 tracker and something actively managed for both china and Japan.

Does anyone have a view?

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Anonymous 1 needed this 'off the record'

Apr 30, 2012 at 19:48

YES SELL YOUR PORTFOLIO AND BET ON THE HORSES YOUR JUDGEMENT IS BAD

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Moylando

Apr 30, 2012 at 21:16

My advice ( no charge )

Sell all managed funds - even the better performing. Buy USA and Asia trackers, buy some gold

- sit back. Take out profits annually and the thousands you'll save in charges and invest in residential property at rock bottom prices from 2013

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yorkshireman

Apr 30, 2012 at 21:38

My advice. The Eurozone is cracking up. Either carry on shorting or keep your hands in your pockets.

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orchardsparks

May 01, 2012 at 11:30

AA. I too sold some RIT when NAV took a dip last year. Big problem is that yield is negligible. ITs standing at premiums are Edinburgh and Murray International both of which yield around 4%.

As BB says RIT has underperformed its peer group over 3 years and I just hope he's right about long term.

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AA

May 01, 2012 at 16:53

I have made the mistake of investing for "the long term" and leaving underperforming ITs alone before. All portfolios need active managing and the scale of poor performnce of RCP deserves "reduction" i.e "SELL".

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mike88

May 02, 2012 at 08:49

I disagree about active manangement of ITs. Keep an eye on them but chasing performance is rarely successful especially when you take fees into account .Often Trusts in racier sectors that rise sharply over one year invariably flop the following year! Always look for Trusts that have performed well over the longer term. Even good long term performers can flop over a short period but keeping your nerve is important for core holdings in any portfolio.

A better philosophy for long term investors is to hold a few UTs/ITs as core holdings and actively manage individual shares. What's worked for me might not of course suit everyone but I note that DI could be moving in this direction.

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Hilary hames

May 06, 2012 at 15:23

Mike88 , do you have any suggestions for ITs/UTs. I have built up a core of individual shares now I keep a close eye on their performance and what is written about them. But its quite a lot of work with a full time job and am coming round to the idea that in terms of sleeping at night and having a life I do not want to add too many more to my mix although Investors Chronicle tempts me each week.

Would you share any of the core of your ITs/Uts - obviously what is right for one investor isnt so for another but its all interesting none the less.

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snoekie

May 06, 2012 at 22:57

Moylandp, forget property, it requires fairly intense management and agents fees on reletting and then there are the annual, or is two yearly certificates required to be produced in relation to services and the obligations you have to provide to the tenant, even when they have f****d up the essential item you are responsible for providing (unless you want to spend up tp 10 times more proving that it was the tenant's fault (and good luck on your recovering costs, they will flit and you will spend a lot more finding them and even then when you succeed some DJ will allow them to pay off at say 10p per week, and even then they will flip two fingers, even a middle digit to you).

A good return for sure, even after basic charges (rental agency fees etc), if you have good tenants, but you need to know your subject, and I did it for years for others, and even I would hesitate. You really need to have a fairly detailed knowledge about L & T law before you embark on that. Even then, you will need about a minimum of 5 properties to cater for a period when one might be vacant or non yielding whilst you are in litigation, (and that alone is a very high blood pressure situation-not to mention legal costs-and forget about claiming from the letting agents, they know (and will not want to know your woes, but still want their fees) F*** All minus 50% (a very prescient- and very true- phrase of a former client)).

Good if you can take the pressure, and certainly good if you want to keep the grey matter in trim. Do you have enough to buy that many properties?

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snoekie

May 06, 2012 at 22:59

BTW DI, BP is getting tasy again, I am torn between getting more, or GSK!!

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snoekie

May 06, 2012 at 23:00

OOPS tasy = tasty

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Hilary hames

May 07, 2012 at 00:24

well, maybe the price of GSK and BP will be peanuts on Tuesday and you can get both

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