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As per the heading, back on Friday 5th June 2020 I went a bit nuts and was lying in bed at some crazy time like 5am in the morning, and my head was utterly buzzing with thoughts about my Approach (my System), how I was Executing it, and how I needed to Optimize what I was doing. I have taken the original Tweets and shoved them into this Blog and they are in italic text. I have then added underneath in many places some further comments to try to make it clearer to Readers. I hope you like it.
WD
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This Blog has come into being after a long string of Tweets I sent out recently which were essentially about my Approach and how I intend to go forwards with ensuring that I can exploit how I do things to maximum effect but with minimal Risk and Effort.
I have actually captured the Tweets and put them into another Blog Draft and hopefully that will come out soon as well. I have added some other thoughts to those Tweets so it should make a decent read and in combination with a recent Blog about my Approach, Readers should have lots of detail on how I have evolved my methods and they can mull over any aspects they wish to copy etc. I will include a link to that Approach Blog at the bottom of this one. One of the concepts that I mentioned in the string of Tweets was that I see 3 key parts to my Approach which I have classified as System, Execution and Optimisation.
From various comments on Twitter recently it is pretty clear to me that some thoughts on how to use Funds to best effect would be worthwhile. This should be fairly straightforward to write so I am diving straight in without a plan but I have been mulling it over for a while.
If you nip over to the ‘Funds’ page on my Website (it might be on WD2 – I really can’t remember !!), then that has some definitions on it with regards to what the various types of Funds are and it also has an example Portfolio which is based on something I constructed with a Friend a few years ago for her own Investing. Recently she has sold about 80% of this Portfolio because she is moving house and I must get around to confirming with her what she still holds. Anyway, that Portfolio example does give an indication of how you can diversify across Funds if you have a Portfolio that only uses Funds and has no Individual Shares in it.
I am aware that I have picked up a lot of new Twitter Followers and Website Readers and Podcast Listeners of late, and it struck me that if you haven’t been reading my spiel and all that for some time, then you might be a bit confused as to exactly how I go about things.
Anyway, first off “Hi” to all these new Peeps and of course “Yo Dudes and Dudessess !!” to all you lot who have been unable to shake yourselves free of the self-induced pain of submitting to my gibberish. My thinking is that in this probably not overly lengthy blog, I will outline at a high level what my Approach is and point you in various directions if you want to get a deeper understanding.
My mate Phil (@sloan_phil on the Tweets) has kindly provided this Guest Blog following the recent events regarding cuts to Dividends and his action in reviewing and rejigging his Income Portfolio. I have read it a couple of times for proofing and all that and it is really good and has some excellent insights into investing in US Stocks.
Many thanks to Phil for providing WD Readers with this and a personal thank you for saving me a load of work in writing a blog this week !! Cheers, WD.
I have no doubt that regular Readers (please no Wheelie, I can’t take anymore purile and unimaginative All-Bran references), will be well aware of my borderline imbecilic obsession with Hedging my Portfolio and you must be exasperated beyond belief to see that I am writing about this well-treaded subject yet again. Anyway, it is what it is, and after the recent heavy sell-off in the Markets (which after all is exactly why I have been mucking about with Hedging for so many years, in anticipation and preparation for such an event) I feel it would be worthwhile to just get down in blog format some thoughts and observations etc. that have arisen after this episode and the Global tragedy of the Coronavirus.
Overall I am quite pleased with the Hedging I did although of course in an Ideal World I could have done it better. I guess my main area of weakness was in not Hedging in larger size (more on this in due course) and I would say another failure was in not getting a big enough Short on early enough. Other than that, and some moments of panic when I shorted more and really was lucky to get away with it, I am overall fairly happy.
My mate Simon Jackson kindly wrote this Guest Blog to try to capture some of the essence of how the recent Market collapse has played out from his point of view. Having read it through for the proof-read, I can say it is a very helpful piece and brings some perspective to what is going on and also shows how someone with Simon’s background of Accountancy can make errors. I particularly endorse his comment that it would be a big shame if newer Private Investors get scared off and leave the great game. I had to smile also when I read his words about selling his Winners too fast !! (or in this particular case his selling being perhaps motivated by simply the relief at getting back to break-even after a difficult Investment had turned around.)
Anyway, it’s a really good read and BIG THANKS to Simon for providing WD Readers with this and for helping me fill up my Website with yet more content !! Cheers mate, Pete.
I’m fairly certain I have written a similar Blog to this many years ago and I think it might have been titled with the use of the word ‘Roadmap’ or something; but I can’t be too motivated to dig it out and I don’t think it will hurt one little bit to scribble out something new which might have some additional thoughts in it and certainly is in tune with the current zeitgeist.
However, I have been enthused to write this because the recent plunge in the Markets and the behaviours and activity I have witnessed on Twitter etc. have highlighted to me that so many People do not have any kind of Strategy and even less do they have a Flexible Plan that is able to adapt fairly quickly to changing circumstances. There doesn’t seem to be a lot of thinking ahead yet it is vital that you do this. The most obvious manifestation of this is that a large number of People are clearly ‘Uber Bulls’ and they in essence remain pretty much 100% Invested whatever the Markets do. This has proven to be a very profitable and wise approach for the last 12 years of a rampant Bull Market, but the idea that this will always be the case is in essence very naïve and dangerous.
Fairly recently I caused a bit of a stir on the Tweets when I suggested that People who have regular payment plans into Funds (normally Unit Trusts – see my ‘Funds’ page for definitions of what the different types of Funds actually are), might be wise to suspend the automatic payments prior to the Coronavirus problems when it is highly likely that we could see Stockmarkets really struggling.
I got a lot of flak for this and it is very understandable why because there are maybe some advantages of such drip-feeding over time; but for me personally, I wouldn’t do this at all. But then I am perhaps a different type of Investor to many others and there is an element of ‘Horses for Courses’.
I’ve been meaning to write this hopefully fairly short Blog for a while but I keep getting distracted onto other things and we actually discussed this on a recent TPI Podcast so I wasn’t feeling a huge need to get it written. Having said that, we didn’t go into a comprehensive coverage of the issues and there is always a sense I have that I should try to cover as many topics as I can within my Blog Archive, so that WD Readers can revisit it in the future if they want to know about something. Maybe new Readers might find it useful also as the whole WD thing should really be to help Newbies as its main Sultana d’Etre (should that be ‘Raisin’?).
The essence of the ‘problem’ with my Income Portfolio is that my original theory behind it was to generate an Income Stream from the Dividends that was at least 5% a year based on the starting position each year. Apart from other aspects such as low activity and low risk and the diversification benefits, part of my thinking was that at some point in time in the future, I might have grown the Income Portfolio enough so that it would be throwing off Dividends that might amount to maybe £6,000 a year or so and that with other Income sources I have, I could get to a position where my Yearly Spending needs on food and rent and stuff are covered without me having to sell any Shares or make any money on Spreadbets etc. It is simply easier to just take Dividend Cash out of an Account than to have to think about which Shares to sell and all the timing issues and suchlike. |
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