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Diary of a Dumb Investor: I'm up and down after rally
My portfolio is looking healthier after the market rebound, but I would be doing better if had sat on my hands.
My portfolio is looking a little healthier following the rebound in the market, but I know that's not going to stop the questions about the overhaul I undertook.
'I'll wager his sells outperform his buys over the next 12 months' claimed Cueball after I sold some of my worst investments and picked the Bankers (BNKR ) investment trust to provide some 'backbone' to my portfolio.
Anthony Tinslay meanwhile demanded more details on my Rolls-Royce (RR) sale. 'Your "slowness" to act might have saved some of your Rolls-Royce loss but at what price did you actually sell?' he asked, before cautioning me on the broker costs I had incurred.
And my choice of Bankers for a global fund prompted more bemusement. 'Aren't you trying to catch a falling knife?' asked Maverick.
Well, Cueball, so far you are right. I'm relieved at the lift my portfolio has received. It's risen to £16,904, up around 21% on when I took over the portfolio nearly four years ago. Not the greatest return, granted, but still better than where I was a few weeks ago.
But looking through the performance of the shares I sold since I dumped them shows I would have done better had I just stayed put. Had I stayed in the European tracker I would have made around £134, while selling out of Imagination Technologies (IMG) at 149p has cost me £133, with the shares now around 173p.
Rolls-Royce shares are now around 709p, up on the 612p price I sold them at (so there you have it, Anthony Tinslay), costing me £96, while Pearson (PSON) has jumped from 776p to 865p since I sold it, costing me £78.
Tally this all together, add on the £11.95 transaction charge for each of the three share sales, and that makes a loss of £504. I've lost £28 on my Mattioli Woods (MTWL) buy so far, including transaction costs, meaning the £187 gained on Bankers is only enough to reduce my net loss on all these transactions to £317.
So the £16,904 I've got sitting in my portfolio would be £17,221 if I'd just sat on my hands. And that's before I count the cost of some of my automated sales. My 'stop loss' on Lloyds (LLOY) was triggered at 68p, saving me from the bottom of this year's banking sell-off, but also meaning I missed out on recouping some of my losses as the shares surged on news of bumper dividends. Taylor Wimpey (TW) too has now crept up above the 170p price at which my stop loss was set.
All this has left me with mixed feelings. For all that some of my worst investments have rebounded, had I held onto them I would still be left with a disparate bunch of stocks lacking a coherent strategy. Admittedly though, a more coherent investment philosophy seems a small crumb of comfort when it's come at a cost of over £300.
Perhaps the lesson to be learned is that although my aims were hopefully laudable, trying to address fundamental asset allocation issues as markets are tumbling is a bad idea. Maybe it's just a time to cling on before making those kind of changes later on.
Despite leaving me worse off over the last couple of weeks, I do think my changes leave the portfolio in better stead. I've got more exposure to broader global markets through Bankers, even if it led to some of you scratching your heads. I know that the investment trust's performance does not exactly set the world alight, with broadly mid-ranking results among its rivals over one, five and 10 years.
If you were going on past performance alone, you would plump for Scottish Mortgage (SMT ), which has delivered roughly double Bankers' returns over the last decade. But if markets are shifting to 'value' investing after a long stint in the wilderness, a high growth fund could come unstuck. Plus, Bankers' relatively high yield for a global trust of 2.7%, and its long track record of growing the dividend (49 years and counting) adds some solidity to my investments. Added to that, the shares were looking cheap, having fallen to a bigger discount to net asset value than normal. So, Maverick, hopefully not a 'falling knife'.
As for the rest of my portfolio, I know there's work to be done. My high weighting to the 'early stage' growth companies held in the Woodford Patient Capital (WPCT ) investment trust stands out like a sore thumb, and the trust appears bereft of any momentum, having fallen further since my last update, despite the rally.
That will be next to go, and could spark a big buying spree, with around £1,700 of my portfolio already sitting in cash. I'm off to draw up a list of potential buys.
My portfolio: Click to enlarge
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More about this:
Look up the shares
- Rolls-Royce Holdings PLC (RR.L)
- Pearson PLC (PSON.L)
- Mattioli Woods PLC (MTWL.L)
- Lloyds Banking Group PLC (LLOY.L)
- Taylor Wimpey PLC (TW.L)
- Imagination Technologies Group PLC (IMG.L)
Look up the investment trusts
- Bankers (Ordinary Share)
- Scottish Mortgage (Ordinary Share)
- Woodford Patient Capital Trust (Ordinary Share)
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by Daniel Grote on Mar 28, 2017 at 16:45