Take a peek at my hand?

brucefan_2

@Ray_Singh_Blue

Thankyou for taking the time to post and share your update.

I enjoy reading your musings and deliberations,which act as a wise reminder to review and then stick to one's plan. 

Ray_Singh-Blue

Update #35, Q3 2023

Feels like I should stop posting in this thread. Seems that every time I hit the "post comment" button, a war breaks out. Or a pandemic starts. Or Britain leaves the EU, or Trump gets elected, or something. This time it's all kicking off in the Middle East, and I deny all responsibility.

It's been a quiet quarter on the ISAs front. All I have done is:

1. Transfer £10K of cash in
2. Sold AirBnB
3. Sold Novartis

You probably need to slap me around a little for selling AirBnB and Novartis. Held them for less than 2 years, and had promised to hold for a minimum of 5. Although, to be fair, that 5 year rule came in after buying those shares and, had it existed at the time of purchase, I may not have been so trigger happy on the buy button.

AirBnB didn't really go anywhere. And with rising interest rates, the news about the property sector is less cheery than a couple of years ago. Some people we know with an AirBnB have said bookings are down. All in all, I felt it was time to reconsider. Exited with no profit and no loss. But, as they say, nothing ventured, nothing gained.

Novartis on the other increased by about 30%. Yet increasingly, felt I might have backed the wrong horse. Novartis is making some injectable cholesterol lowering drugs with great potential, but I realise now that injectable weight lowering drugs is where the action is at. And those are made by the similar sounding company Novo Nordisk. An investment in that company 2 years ago, would be up around 100%. It seems obvious now. Duh. People don't care as much about their cholesterol as they do about their appearance. I kick myself. But, lesson learned. And, actually, a reasonably profitable lesson too. The Novartis horse didn't come last, it just didn't come first. So there's that.

Today the ISAs look like this:

VWRL, £172K, 74%
CSH2, £45K, 20%
Palantir , £14K, 6%
-------------------------
Total, £232K, 100%

And that's it. Palantir by the way has shown some promising equine form. Up 120% since purchase. But there are many fences and hurdles left to jump- as I will be sitting on my hands & will try to avoid selling for another 4 and a half years. Patience and persistence are virtues, as you wisely remind us, @brucefan_2. Let's wait and see.

Good wishes to all, 

Ray

Ray_Singh-Blue

Update #4, Q4 2023  (edit, I mean #36)

Well, decided to buy some bonds.

For years I have wondered what they might taste like. (Answer? Bit like chicken, bit like cat.)

Yields on long term government bonds have gone from a low of around 1% in March 2020 to 5% three years later. The re-rating in yields has led to a crash in the value of existing bonds and bond funds. Various charts on t'internet show the crash in long-term bonds has been of roughly the same magnitude as the crashes in the stock market during the dot-com bust and the 2008 Financial Crisis.

As expected!

Despite just being a simple guy, it seemed mathematically obvious to me that this was going to happen, the question was when. Now that the worst appears to be over, I decided to finally move a little of that cash into a government bond fund to test the water.

Although, I don't actually need bonds. My investment strategy does not require them. It allows for a pension to provide fixed income. But I just fancied a flutter that they may outperform cash.

There may yet be more downside, if interest rates rise further and unexpectedly. But my gamble - or, as I like to call it, investment thesis - is that that is not going to happen.

In terms of practicalities, I sold up the placeholder that was CSH2 - and a very good one it has been too, thanks @Stargunner-  and instead bought VGOV, Vanguard's UK bond fund. And a little more of that hardy perenniel, VWRL.

Current ISA:

VWRL £194K, 80%
VGOV £23K, 9%
Palantir £14K, 6%
Cash £11K, 5%
---------------------
Total £242K, 100%

Currently appear to be heavily leaning towards global equities. Not quite sure this is deliberate. Before I paid off the mortgage, was 50:50 cash and shares. But then paid off the mortgage with cash, and the shares have kind of grown. They have risen by 14% this year, and that's been a nice place to be. But what about next year?  What might a worst case scenario look like? Well, a big drop in equities and an unexpected rise in interest rates could reduce the value to less than £150K. Would I be happy? No. But could live with it.

So, for the time being am going to trundle on. Although feel any new investment in 2024 will probably be to cash or bonds. Or maybe - just maybe - I'll go full circle, 10K in an aluminium ETF.

Not really

Merry Christmas everyone. Keep safe, keep warm, keep solvent.

Ray

Ray_Singh-Blue

Update #37, Q1 2024

At various points over the last ten years I have thought "Tech stocks seem so overpriced. If only I had bought some years ago."

But, as they say, the second best time to plant a tree is now. And so one year ago, I finally put some money where the mouth is, and invested six thousand pounds in the stock of a tech company.

As of today, that stock is worth almost twenty thousand pounds. In the years of keeping this diary, this is the biggest single stock gain. Pressing the "buy" button was a nervous moment, especially as I fully intended to hold for five years come rain or shine.

And I'm considering buying a second tech stock, Microsoft. The five year rule would apply. The shares look mighty expensive, but they did five years ago too. Still mulling over whether to plant this tree, haven't yet reached for the wellies and spade. If I do, you'll be the first to know. But don't hold your breath as I'm not planning on posting again until June.

Talking of holding your breath, did you know we all have just three minutes to live? It's true. But the clock resets every time you inhale...

  

Of course, the problem with buying shares is that any one company could go to custard tomorrow. To a degree, so could the stock market generally, at least for a while. And so to reduce the chance of bad things happening:

1) most of my equity exposure is in a world index tracker, and;
2) not all investments are in equities.

It matters. Somehow, over a quarter of a million is sitting in the ISA now. Not exactly Jeff Bezos, but still, it's nice to know it's there if needed. It would be a shame to spend it all on custard.

What's the right balance of equities and safer stuff? I keep coming back to some simple advice I read in this blog back in the mists of time. (Sadly, the blog has since been updated & the original wisdom is no more).

Some bloke on the internet said:

In many aspects of life, there is a default option. Likewise, in investing… Unless you have a good reason to do something differently, you should go with the default option. Save half your money is risky investments such as stocks, and half your money in relatively safe investments such as bonds. Don’t change this ratio no matter what the markets do. You should use one low-cost total stock market index mutual fund and one low-cost bond market index mutual fund."

It's super-vanilla advice, and not everyone agrees. For example, back in September 2017 and quoting HL Mencken:

AnotherJoe said:

For every complex problem there is an answer which is clear, simple and wrong.

Maybe... but I find this simple answer to be particularly enduring, psychologically and behaviourally. If the market goes up - great -you're half in. If the market goes down - phew - you're half out.

Which is a roundabout way of saying, the only thing I did this quarter was sell £85K of VWRL and buy cash with it, to rebalance and sleep a little better at night.

The 'cash' is actually in the form of the CSH2 ETF, the magic fund that you can hold in an ISA but ought to behave a bit like a high interest savings account. Over the last year it has returnd +5.2% and has an expense ratio of 0.07%.

And so, at the close of play on the 37th quarter of this journey, ISAs are:

VWRL | equities |£118,421

CSH2 | cash | £98,433

VGOV | bonds | £22,958

PLTR | equity | £19,383

Which, if you add it all up, makes:

equities | 53%

other | 47%

And with that, may I bid you farewell and wish you a good night's sleep, undisturbed by the exciting thought that the stock market may go way up, or the nagging fear that it may go way down.

Goodnight,

Ray

brucefan_2

@Ray_Singh-Blue

Ray - thank you again for this always welcome update and your calm musings on your investment approach, which make for an enjoyable read.

The only disappointment is having to wait until June for the next update.

ShinyStarlight1

Ray_Singh-Blue said:

Update #37, Q1 2024

At various points over the last ten years I have thought "Tech stocks seem so overpriced. If only I had bought some years ago."

But, as they say, the second best time to plant a tree is now. And so one year ago, I finally put some money where the mouth is, and invested six thousand pounds in the stock of a tech company.

As of today, that stock is worth almost twenty thousand pounds. In the years of keeping this diary, this is the biggest single stock gain. Pressing the "buy" button was a nervous moment, especially as I fully intended to hold for five years come rain or shine.

And I'm considering buying a second tech stock, Microsoft. The five year rule would apply. The shares look mighty expensive, but they did five years ago too. Still mulling over whether to plant this tree, haven't yet reached for the wellies and spade. If I do, you'll be the first to know. But don't hold your breath as I'm not planning on posting again until June.

Talking of holding your breath, did you know we all have just three minutes to live? It's true. But the clock resets every time you inhale...

  

Of course, the problem with buying shares is that any one company could go to custard tomorrow. To a degree, so could the stock market generally, at least for a while. And so to reduce the chance of bad things happening:

1) most of my equity exposure is in a world index tracker, and;
2) not all investments are in equities.

It matters. Somehow, over a quarter of a million is sitting in the ISA now. Not exactly Jeff Bezos, but still, it's nice to know it's there if needed. It would be a shame to spend it all on custard.

What's the right balance of equities and safer stuff? I keep coming back to some simple advice I read in this blog back in the mists of time. (Sadly, the blog has since been updated & the original wisdom is no more).

Some bloke on the internet said:

In many aspects of life, there is a default option. Likewise, in investing… Unless you have a good reason to do something differently, you should go with the default option. Save half your money is risky investments such as stocks, and half your money in relatively safe investments such as bonds. Don’t change this ratio no matter what the markets do. You should use one low-cost total stock market index mutual fund and one low-cost bond market index mutual fund."

It's super-vanilla advice, and not everyone agrees. For example, back in September 2017 and quoting HL Mencken:

AnotherJoe said:

For every complex problem there is an answer which is clear, simple and wrong.

Maybe... but I find this simple answer to be particularly enduring, psychologically and behaviourally. If the market goes up - great -you're half in. If the market goes down - phew - you're half out.

Which is a roundabout way of saying, the only thing I did this quarter was sell £85K of VWRL and buy cash with it, to rebalance and sleep a little better at night.

The 'cash' is actually in the form of the CSH2 ETF, the magic fund that you can hold in an ISA but ought to behave a bit like a high interest savings account. Over the last year it has returnd +5.2% and has an expense ratio of 0.07%.

And so, at the close of play on the 37th quarter of this journey, ISAs are:

VWRL | equities |£118,421

CSH2 | cash | £98,433

VGOV | bonds | £22,958

PLTR | equity | £19,383

Which, if you add it all up, makes:

equities | 53%

other | 47%

And with that, may I bid you farewell and wish you a good night's sleep, undisturbed by the exciting thought that the stock market may go way up, or the nagging fear that it may go way down.

Goodnight,

Ray

I’ve only just come across your thread and want to thank you for it. As someone who is new to investing, I found it really helpful, and entertaining.

Ray_Singh-Blue

Update # 38   Q2 2024

@brucefan_2,  @ShinyStarlight1 ... thankyou.

Can we pick up were we left off? For ages I have wanted to own a small slice of big tech. Microsoft, Apple, Nvidia... companies that are now at the core of almost everything we do. And with the advance of AI, it appears to me that humanity is taking yet another step forward in the mid 2020s.

Trouble is, the shares seem really expensive.

Microsoft, for example, now has a market capitalisation of around 3 trillion dollars. That's roughly the same as the value of all the goods and services produced in the UK last year. And the UK is the world's seventh biggest economy.

Is this fair value?

***

Well, a brief Google suggests there have, at moments in history, been other companies worth more than 3 trillion dollars (in today's money).

One was The Dutch East India Company, which in its 17th century heyday was worth 8 trillion of today's dollars. Still, and don't quote me on this, Microsoft appears to be only the fourth company ever to attain a 3 trillion dollar market cap. (The others were "The Mississippi Company" and "The South Sea Company" in the 18th Century, for what it's worth.)

Is 3 trillion dollars a fair value? I don't know. But the market seems to think it is.

Yet there are maybe warning signs. In a recent blog post, Monevator pointed out that something like 70% of large companies mentioned "AI" in their annual reports last year. Perhaps an amber "bandwagon" light on the dashboard? And we have had a bull run in equities generally. The best time to plant a tree is 20 years ago, but the worst time is right before a forest fire. So there's that.

Another consideration is that Microsoft already makes up about 4% of my global passive equity tracker, VWRL. Do I really need to tilt more than that towards one company?

***

Well, now that I have a few written investment rules, things are a little clearer. One is that if I buy a share I must hold it for 5 years. Another is to go in with at least 5% of the value of the whole portfolio, so that it will not be an inconsequential investment. These are rules that I have settled on and appear to be able to live with.

Over the last few months I thought about this, and concluded that the single question I need to ask is this:

"Over the next 5 years, do I expect company X to outperform the world markets?"

Just a simple balance of probabilities.

In the case of Microsoft, outperforming the world markets would mean growing to make up 5%, 6% or even 10% of VWRL.

Well, I thought about it, and while this is possible - AI is hot stuff - it just doesn't seem likely enough to take a 5 year punt on. In betting terms, I think it's safer to conclude that this particular race has probably already been won.

So... think I'm out.

But the consolation is that, if I'm wrong, owning a global equity tracker still offers "skin in the game". Quite a lot of skin, actually. Together, just five tech companies Microsoft, Apple, Nvidia, Alphabet and Amazon now make up around 15% of VWRL.

***

Having said all that, I went ahead anyway. Planted the tree I should have planted 20 years ago, buying 13K of shares in Google.

Guess sometimes logic only takes you so far.

***

And now the current portfolio is:

VWRL | £154K | Cap-weighted world equity |51%

CSH2 | £90K | Cash equivalent | 30%

VGOV | £23K | UK government bonds | 8%

Palantir | £20K | Scratching the itch | 7%

Alphabet Inc | £14K | Scratching the itch #2 | 5%

***

Total £302K.

Equities 62%, cash and bonds 38%.

Cheers,

Ray

aroominyork

Ray_Singh-Blue said:

Update # 38   Q2 2024

Yet there are maybe warning signs. In a recent blog post, Monevator pointed out that something like 70% of large companies mentioned "AI" in their annual reports last year. Perhaps an amber "bandwagon" light on the dashboard?

I think you can safely consider that "AI signalling".

Ray_Singh-Blue

Update #39, Q3 2024

You know what they say? Time flies like an arrow. Fruit flies like a banana.

That's just how it is round here. Life has been busy, and this quarter I mainly just let my ISA take care of itself. Nothing in, nothing out, although did use some cash to top up that global equity tracker a little when there was a mini-flash sale back in August.

Something interesting happened. The tech firm I bought shares in last year got included in the S&P500. Those shares are now worth over 4 times as much as early last year.

The bottom line is now:

VWRL | 172K | 54%

CSH2 | 82K | 26%

Palantir | 28K | 9%

VGOV | 23K | 7%

Alphabet | 12K | 4%

Total | 318K

That's all. Hope to see you at Christmas for the 10th anniversary of this little thread.

Ray

badger09

@Ray_Singh-Blue

Thanks for your update. 

Sometimes doing nothing is the best thing to do. I do it all the time😊