Should I reduce my holding in FEVR (Fever Tree)?

Linton

itwasntme001 wrote: »

......
With regards to rebalancing - i just do not believe in it. Simply why would you want to cut your winners to add to the losers? It just doesn't make sense. I am holding a portfolio that is 80% in US stocks thus "should" have rebalanced a long time ago, however i would be making a lot less in profits given out performance of US markets vs pretty much all other markets.
......

The investment universe is not divided into inherent "winners" and "losers". There are some investments that perform very well in the particular circumstances of the time and some that dont. But circumstances change in ways you cannot predict. However you can reasonably safely predict that a particular country or industrial sector is not going to suddenly disappear. If you invest in individual shares you have the added wild card of the individual decisions made by the company's management, and of course individual companies can disappear overnight.



In such an environment what does an investor do? One approach is to allocate your assets in a way with which you feel comfortable. Then as the market moves to disturb that allocation the logical reaction would seem to be to bring it back to what you were comforable with in the first place.


Keeping to an allocation, particularly with funds, has the added advantage that you steadily realise profits from the currently well performing sectors and put it into sectors that ae currently relatively cheap. Sell high and buy low is surely the best strategy for making money in the long term in an environment of uncertainty.


In your case if you are happy with 80% US and 20% ROW then fine. So what do you do when you wake up one morning to find that the allocation is actually 90% US and 10% ROW or 60% US and 40% ROW?

itwasntme001

Not all companies recover and start to outperform after a period of underperformance. Some companies stay low performing and eventually move out of the index. Meanwhile as an index investor you had some of your capital invested in a poor performing stock. It is entirely upto you to determine if you want to buy an index (and so implicitly accepting that you will hold bad performers) or be more active and chose a portfolio yourself or invest in an active manager (and try to outperform the market by subjectively determining good companies from the bad). But do not think a passive index is the least riskiest option. Its a lot more complex then that.


I will not suddenly find myself even more overweight US or find that US markets tanked and so am a lot less overweight in US then i was. This is because i take a more active approach to investing and so monitor the markets on a frequent basis (almost daily). But if i do see US markets rising, i would be thankful i was overweight and stay put until the price action and fundamental picture tells me otherwise. If the US markets start tanking i would do the same and at some point would cut my position. I realise and fully accept i will never get out at the top. But when i know the markets is turning into a bear market i will reduce my position.


So again it is entirely upto the person what they chose to do. Given this forum, by far the majority would be taking a passive approach (perhaps even investing some capital in active managers as well). There is no right or wrong answer as it entirely depends on the individual. I just think, IMO of course, that my approach is less risky then blindly investing in a passive index fund for a long time.

itwasntme001

Theres a general saying by some investors that they would rather buy great companies at fair prices rather then ok companies at cheap prices. something along those lines. I 100% agree with this. there is a reason for prices of a stock appearing cheap usually. Sometimes it recovers but a lot of the times it doesn't. Sell high and buy low does not always work. It entirely depends on what one is selling and buying.


For example REITs, utilities, retail, consumer staples etc appear cheap vs rest of the market but they continue to underperform. Maybe at some point they will start to outperform but whos to say when? Maybe after a decline of another 20-50%?


With passive investing you simply have to accept that some of your capital is invested in bad companies as in a universe of thousands of companies, many will be bad.

kidmugsy

"twot one ale x" is an interesting pseudonym. What moved you to choose it?

dividendhero

I don't particularly follow the drinks industry, but I do know it's dominated by big players - many of the brands are owned by global companies, eg Tropicana is part of Pepsi.

Regarding Fevertree, I suspect they'll either get bought out or crushed by a company like Diageo

aroominyork

Audaxer wrote: »

I think the point of rebalancing is to maintain your original risk level rather than reduce it. If you started at 70% equities and are now at 80% equities, your risk level has increased. If you are happy for your risk level to keep increasing and accept that you will have a bigger loss come the next equity crash then that's fine.

This is very wise. You have to be aware, very aware, of having a run of good fortune and thinking that the gains you have made should be your norm in future. Instead, see it as good fortune, take a step back and combine a) learning from your success, with b) considering how you would invest if your starting portfolio had looked like your current one.

ArmyDilllo

I've been actively investing for myself for a few years and have recently transferred all but one investment to my own care as I've been outperforming the "professionals" magaing my portfolio for me.
I now have an average growth which has grown to approx. 18% p.a. since I began in 2003.
Some years have been better than the average, some worse.

I have FEVR in my portfolio as well and have enjoyed the growth you have also seen.
I also made similar through my faith in BP.
The difference between the two for me is the dividend.
I couldn't lose with BP and originally bought them for the 6.7% dividend (now around 5.7%).
But the share price grew massively and I did what you are thinking of and reduced my holding.
A month later the price had fallen.
So I bought them back.
I did that twice.
Then I began doing it with other stocks.
FEVR; PRSM; UKOG.

It is a HIGH-RISK strategy but it worked for me.
I made +250% on UKOG including once when I accidentally made 20% in under one minute (was leaving a 90-day instruction to sell if the price fell to a certain level which completed as I finished writing it).

Now I don't take as much risk.
But I do monitor the portfolio and re-balance if some shares grow too fast ("too fast" = nice problem to have).
This means I may lose out on some incredible growth, but also spreads the risk, should they contract.

My portfolio is split around 50/50 between shares and funds.
I rarely tinker with the funds (except ditching Woodford Equity.., twice!).

I don't trade shares much as my main strategy/phiolosophy.
After BP I took £1000 and started consciously trading with it to see if I could make more without risking much.
So far I have made a lot from it, relatively.
I push 50% of those profits back into my ISA/SIPP (tax-free) portfolio, and re-invest the rest.
In just over a year I've grown it to £8k (£4k after pushing the other £4k back to my main portfolio).

Anyway, I can't take you by the hand and tell you the strategy you're considering is best.
But this is how mine's working for me.
When I pick stock I look at where the business is going and who's driving it.
I'm holding onto FEVR.

But I'm also holding Capita which is down 17.5% and OnTheBeach which is down 19%.
You pays yer money and you takes yer pick.
Good luck.

twotonealex

I thank you all for your inputs to my thread!

Following on from the advice I am going to:

- Do some research into a global fund (Even though my Architas is a global fund as far as I can see?), list the options in a new thread once I've done this, and gauge opinions.

In terms of my current fund selection & FEVR, I will either:

A) sell all funds and FEVR and consolidate into a global fund
or
sell all funds, and cut down share holding in FEVR by half, investing all 'cash' in a global fund and retaining a small holding in FEVR tree.

I appreciate all of your inputs on this and my other post in the Pensions section.

Thanks!

twotonealex

ArmyDilllo wrote: »

I've been actively investing for myself for a few years and have recently transferred all but one investment to my own care as I've been outperforming the "professionals" magaing my portfolio for me.
I now have an average growth which has grown to approx. 18% p.a. since I began in 2003.
Some years have been better than the average, some worse.

I have FEVR in my portfolio as well and have enjoyed the growth you have also seen.
I also made similar through my faith in BP.
The difference between the two for me is the dividend.
I couldn't lose with BP and originally bought them for the 6.7% dividend (now around 5.7%).
But the share price grew massively and I did what you are thinking of and reduced my holding.
A month later the price had fallen.
So I bought them back.
I did that twice.
Then I began doing it with other stocks.
FEVR; PRSM; UKOG.

It is a HIGH-RISK strategy but it worked for me.
I made +250% on UKOG including once when I accidentally made 20% in under one minute (was leaving a 90-day instruction to sell if the price fell to a certain level which completed as I finished writing it).

Now I don't take as much risk.
But I do monitor the portfolio and re-balance if some shares grow too fast ("too fast" = nice problem to have).
This means I may lose out on some incredible growth, but also spreads the risk, should they contract.

My portfolio is split around 50/50 between shares and funds.
I rarely tinker with the funds (except ditching Woodford Equity.., twice!).

I don't trade shares much as my main strategy/phiolosophy.
After BP I took £1000 and started consciously trading with it to see if I could make more without risking much.
So far I have made a lot from it, relatively.
I push 50% of those profits back into my ISA/SIPP (tax-free) portfolio, and re-invest the rest.
In just over a year I've grown it to £8k (£4k after pushing the other £4k back to my main portfolio).

Anyway, I can't take you by the hand and tell you the strategy you're considering is best.
But this is how mine's working for me.
When I pick stock I look at where the business is going and who's driving it.
I'm holding onto FEVR.

But I'm also holding Capita which is down 17.5% and OnTheBeach which is down 19%.
You pays yer money and you takes yer pick.
Good luck.

Thank you for this! Another valid input to consider