Investimouse

Three years later - what happened in that time?

noreply@blogger.com (dave) — Sat, 05 Jun 2021 08:32:00 +0000

It's now June 2021, and Investimouse finds himself wondering why the blog hasn't been updated for a couple of years. What happened?

April 2018 saw Investimouse divest quite a bit and with the sale of property back home in NZ was able to move out of the humble abode and into a proper dwelling again, with a garden, garage, and nice neighbours. Lovely stuff.

So it was a case of starting again with the iWeb ISA.

I sensibly held onto Apple and Fundsmith. Along with those winners, I chose to keep BCPT (the commercial property REIT - disastrous following COVID), an index-linked GILT fund, and HINT (an international income trust). Three other fixed income instruments survived the cull too, NWBD, LLPC, and SQN (now renamed KKV).

It was revealed last year, that SQN was sitting on a pile of nothing and the assets held were nothing near the valuation the fund managers claimed. Change of manager and name (KKV) and they've decided to run it down to nothing and end the fund - slowly getting some money back from it as they sell assets but a lesson well learned. Never put money into finance companies. They are con artists on the whole and far too prone to mistakes, misadventure, and lying.

That has steadily been added to over the last few years with an Emerging Markets bond ETF, LGITI (the global ex-UK trust), Unilever, Computacenter, and an Asian income fund. It seems like a hotchpotch and I could probably replicate it with a global ETF and a global bond ETF, but once in Apple and Unilever, it seems mad to sell them.

Then in Jan 2020, I found Trading212 and the appeal of an app along with no commission on share buying meant, that last year's ISA was put there. Got to say they've been brilliant so far, speedy buying, access to loads of markets, fractional shares, and pies. Fractional shares are a game-changer, meaning you can get access to expensive shares like Berkshire Hathaway and Amazon without emptying the entire bank to get one share.

So I've also built up a tiny nest egg in T212 with 7 pies:

Artificial Intelligence

Diggers

Dividend

Future

Quality Growth

Trust Me

UK Tech

Just to mention again, Pies in Trading212 allow you to build a group of shares into a mini-fund of your own. You assign each holding a % of the pie and then future funds and dividends will be invested in each holding at that percentage. And with fractional shares, it means you can drop small amounts (say £20) and the money is still able to be invested in your pie. So a Pie with a bunch of tech shares in it can act like SMT without having to pay any OCF (fees).

I'll save going into the detail of each one for later posts, but probably fairly obvious where I'm going with each of them.

Recession Watch Part 3

noreply@blogger.com (dave) — Mon, 05 Mar 2018 18:06:00 +0000

Well, well, well. Things have been getting interesting since the last Recession Watch post. In the weeks since then, Carillion have gone bust, big high street retailers are dropping like flies (Maplin, Mothercare, Toys R Us, etc. ), casual dining restaurants are closing their doors in droves (Prezzo, Byron Burgers, Jamies Kitchen, etc.) In fact a report shows that a third of all casual diners are losing money. There is more carnage to come I think.

Carillion's plan to become the defacto government for building and doing stuff backfired on them when they turned out to be more incompetent than an actual bureaucratic government department. Hopefully the little companies that they took over MacAlpine, Tarmac etc. can be recovered and put to good work again. And the various services that should be looked after by govt. can be put back in the right place.

And now the 'Beast from the East' arrived and has decimated the business environment for a whopping 5 days. pffff... no effect whatsoever you'd say, but papers are reporting today as much as several billion pounds - maybe up to 0.2% of GDP. Once you add that to everything else going on, there will be no growth to minus levels in the first quarter of the year in the UK.

Over the weekend news of Trump declaring a trade war. Tit for tat tariffs are now virtually guaranteed and everything will get a little more expensive. Inflation will tick up again and the Fed and the BOE will have little choice than to up interest rates. While that might not have much effect in the US, here in the UK everyone has borrowed too much at tiny rates for too long.

Lastly, on Friday a leading indicator for a recession (quoting myself "so RecCon 4 will probably be the failure of an online stock broker"), stockbrokers taking their clients money nefariously and running away with it. Beaufort Securities may have been little more than a boiler room operation but they were regulated by the FCA and they still managed to run off with everyone's money.

So the Recession Watch is going to move the RecCon meter straight past level 3 and on to level 4. One to go and we're in the mire looking for the paddle.

In the meantime I've gone half to cash after selling up in the second week of Jan and the rest is in world trackers. I'm no perma bear but if Mr Buffett can't find things to buy and is stocking up on Apples then that sounds a pretty sensible plan.

Be careful out there kids.

Recession Watch Pt 2

noreply@blogger.com (dave) — Mon, 23 Oct 2017 08:58:00 +0000

I'm moving the RecCon meter to level 2. Although I'm not completely sure we're not already at level 3. Let's be cautious though.

From the weekend's papers, we find that investment in the UK motor industry will halve this year. Last week Sainsbury's announced job cuts of 2000 and IWG (formerly Regus), the purveyor of rented offices to the self-employed and small business sector announced a massive profit warning and shares dived 35%.

Today, profit warnings from more UK companies including Pendragon, the car retailer.

With inflation at 3% and chugging north, Carney sitting on his misbegotten hands, and Brexit talks circling the drain there's no good news on the horizon. Where's the extra money going to be found for people to spend? Pay packets on the decline (not even remotely keeping pace with inflation) according to the latest stats from the ONS.

We are at the beginning of a maelstrom of disaster by the looks of things. Brexit caused or not, it increasingly looks more difficult to make as much money as last year. Which means less to spend in the real world.

Recession Watch pt 1

noreply@blogger.com (dave) — Thu, 12 Oct 2017 09:35:00 +0000

As the bull market rumbles on into its 8th year, Investimouse has his ear to the ground looking out for signs of an impending recession in the UK.

Monarch Airlines Collapse

We just moved to RecCon 1

I see RecCon 5 being another run on the banks. But who has any money left in the banks? so RecCon 4 will probably be the failure of an online stock broker followed by the collapse of the property market to take us to RecCon5.

Some way off hopefully.

Finally someone else talks some sense about devaluation

noreply@blogger.com (dave) — Wed, 30 Aug 2017 14:22:00 +0000

It's not just me that can't see why the constant devaluing of the pound is a good thing. I wrote way, way back in 2012 about how poor I was getting due to the madness being caused by devaluation back then and it's only gotten worse due to Brexit and that fucking idiot Mark Carney (head of the Bank of England) dropping interest rates even further in 2016.

I really only care about the GBP to NZD rate which has been on a tear down ever since 2007. Take a look at this graph. It's halved in 10 years. That basically makes the UK and everyone in it half as wealthy as it once was.

Now a few people are starting to wake up to the fact that constantly devaluing the pound is only doing harm. Plus, if it was actually useful then its benefits would have been felt by now and the UK would be the most prosperous paradise in the universe.

Stephen King wrote in the FT over the weekend about it - no link to the original article as The Times has a paywall, but there's a discussion on it here along with the text from the article.

Is it the End of Times or the Start of the Greatest Boom Ever?

noreply@blogger.com (dave) — Fri, 30 Dec 2016 16:00:00 +0000

2016 rolls to a close with the FTSE100 closing on all time high of 7142. So have we hit peak times in the UK or is this the start of something truly great?

When I started investing (or at least started keeping proper records of my investing) in 2007, the FTSE was at 6607. So in the 9 years since, it has crept up just 8%. Hardly an indicator of a booming economy. Of course, we've had the Great Financial Crisis in that time and several other mind-blowing black swans like Brexit, Euro Crises, wars, and terrorism.

Every bit of finance reading I do tells me that it is foolish to try and time markets or even worse do your own stock picking, yet if you had bought a FTSE tracker you'd be just 8% better off over those 9 years. That is truly awful performance for your money. No wonder cash still holds its appeal even with its derisory interest rates.

This year the Team Dave Fund of Fun-ness finished up 24.7% - the best year for quite some time.

This result was all due to timing the market - going big with two chunks of money - once in January when markets were nervous about Fed tightening and immediately following Brexit. The rebounds after each drop have been huge and represented excellent opportunities. In January buying anything in the US market was the thing to do while in July buying anything in the UK was the correct option.

I got 'lucky' both times I guess. And so for this year, I can't help but feel we have hit the top and will probably bob around this level for a while. America seems massively over-valued and Trumptimism could be sadly mis-placed - how quickly can he genuinely make changes? And does anyone actually believe he knows what he's doing?

In the UK, there is no catalyst for a boom to come - everyone here is stretched massively by housing costs while business is equally poorly treated by appalling business rates and high rents. Meanwhile savers continue to be pillaged by Mark Carney's ridiculous behaviour at the Bank of England. How does he sleep at night while the pound is ravaged, companies and intellectual property are sold off to the world. Someone really does need to point out to him that currency / exchange rates are only useful to business when someone actually wants to buy your product / service. If you make something no-one wants, it doesn't matter how cheap it is in exchange terms.

This year's massive devaluation was the third one I've experienced here and every time, it provides only VERY short term boosts. Meanwhile it destroys savings, imports inflation, and reduces internal investment. Who knows how Brexit will turn out this year. Maybe that will be the catalyst for a boom? It's a fingers crossed time though and hugely reliant on people in the civil service and government actually caring and doing their best rather than feathering their nest. Maybe we'll see an actual real redistribution of income because of it but I doubt it.

My guesses for 2017:
Cocoa - it was destroyed in 2016 - bound to make a comeback eventually.
Gold - again decimated - got to be an option if inflation makes a re-appearance.
Any decent internet based world focussed company. eg. Boohoo, Superdry, Microsoft.
ITV to be taken over.
Samsung to fire a bunch of people and return from the ashes.

Management - is anybody worth 350x more than another person?

noreply@blogger.com (dave) — Mon, 15 Feb 2016 09:53:00 +0000

You have to listen to this podcast by NPR on why CEO pay exploded in the 90s and has continued ever upwards ever since.

Episode 682: When CEO Pay Exploded

They go down, they go up

noreply@blogger.com (dave) — Fri, 22 Jan 2016 11:34:00 +0000

Spotted in a telegraph comment on the fractious stock market this week.

News from a week on the stock market.
Helium was up, but feathers were down. Paper was stationary, but pencils lost a few points. Lifts rose but escalators continued their slow decline. Switches were off and mining equipment hit rock bottom. The raisin market has dried up. Pampers remained unchanged while Sun peaked at mid-day. Andrex tissues touched a new bottom.

Awful Management, Horrible People

noreply@blogger.com (dave) — Mon, 21 Dec 2015 08:17:00 +0000

The longer you invest in companies, the more you realise that management are the key to everything the business does. You don't have to look hard to see companies behaving badly in this world. From oil companies, banks, utilities, and retailers - it seems everyone is putting their hands in the till, robbing their customers, destroying the environment or mistreating their staff. Bad management has been mentioned before on the blog and its a theme that needs continuing.

What continues to surprise though is that at the top of companies and in management positions everywhere are PEOPLE. People just like you and me who wouldn't want to be treated poorly, paid badly, or provided an inferior service. As a shareholder, I want the staff in those companies to feel valued, paid fairly, and therefore be productive at work and in their communities. As a shareholder, I want the customers to get great service, buy more products / services and recommend the company to friends and families creating a growing business. As a shareholder I don't want either of the next two examples happening to me.

Just this week (and it's Christmas remember), we've got another couple of examples of terrible management making bad decisions for staff and customers.

First, there's Mike Ashley and his team of thugs who run Sports Direct. The Guardian have produced an expose on working conditions there and detailed how poorly staff are paid and treated. The share price of SPD.L has dropped to 570p after averaging around 700p during the last 6 months. Poor treatment of staff has not just affected Mike's workers but also the millions of people who have shares in Sports Direct in their pensions. This poor attitude to people has cost everyone money.

Secondly, NPower's customer service has been so bad they've been fined £26M. Mental! Had they bothered answering their phone, treating customers with dignity, and sorting out the problems they would have avoided having to pay this fine. As it is, behaving like a normal company would almost certainly have cost them less than the fine - spending a few million more on a customer service centre would have solved most of the issues. NPower is run by German company RWE and routinely loses money in the UK. It's a basket case that should probably be closed or be absorbed by someone who knows what they're doing.

I'm reminded of Seth Godin's writings here. Whatever you feel about Seth, his common sense posts may just be spouting the obvious a lot of the time, at least he's putting these observations into print. A recent post suggested the pursuit of perfection in companies was impossible, the resources required to make small incremental increases in service levels were unaffordable. He called it 'Understanding the Doublings'.

One approach, which some organizations use, is to redefine your usual systems so you are able to please most people without your team going through a Herculean sprint every day, and then (this is a key element as well), eagerly and regularly apologizing and giving refunds to the one in 150 where it just can't be done.

Common-sense stuff. Nobody's perfect. Trying to get there is impossible, but having a system in place to compensate when you can't meet impossible expectations is good business. Your customer isn't put out and your reputation stays intact. This just isn't happening in the UK at the moment. Everybody has given up on perfection - that's fine. But they've also given up on Good, OK, Average and Mediocre. I can think of only one place in the country that has any standards whatsoever in customer service and that's John Lewis.

No wonder people are beginning to seek local over national. Reputation is easier to to ascertain with a local company or person - a few phone calls and you've got the recommendations that you require. Locally a Facebook group helps with recommendations on companies that provide great service and products. A quick post to find out the best plumber, electrician, etc. gets plenty of replies in our community. How are the Sports Directs / NPowers of the world going to compete against that? Answer: They're not. They're dinosaurs that are going to die.

Bad management doesn't seem to be going away in the UK, despite numerous fines and general contempt now commonplace for industries that perennially offend (eg. Banks, Utility companies). Why do leaders behave this way? Would they want to be treated this way themselves? Are they so removed from society they no longer understand how the world works?

For more information on how to behave properly as a manager in an organisation see any of Tom Peter's books or his blog. Putting People First is basically his entire manifesto and would be a great place to start for any manager / leader of a bank, shitty retailer, or utility company.

Fundsmith - still delivering

noreply@blogger.com (dave) — Thu, 05 Nov 2015 14:03:00 +0000

Wrote about Fundsmith a few years ago and popped a few pounds into Terry's fund at the time. It's done ok....

Fundsmith at five: 'I naively supposed the financial crisis had taught investors a lesson'

The highlights:

17.2% annual returns over 5 years
121% up

Not bad.

Save Dat Money

noreply@blogger.com (dave) — Wed, 23 Sep 2015 09:02:00 +0000

Something a bit different this time but with the same ethos behind Investimouse's approach to life. This is a video by rapper Lil Dicky. Not being a mega celebrity superstar, Lil Dicky has no money to make his video so approaches those much wealthier for assistance to make his new video, $ave Dat Money.

I may not have sold it that well, but it's very funny. Watch as Lil Dicky goes door knocking in wealthy LA suburbs asking to use their swimming pool, gets rejected by multiple big name car brands, and is forced to beg to get into a swanky nightclub for filming.

Remember kids, Save that Money.

Lil Dicky - $ave Dat Money feat. Fetty Wap and Rich Homie Quan

What does Insider Trading look like?

noreply@blogger.com (dave) — Fri, 01 May 2015 14:30:00 +0000

This!

This is Creighton's share price for the last few months this year. You may remember I tipped them as my small cap guesstimate for this year in the year-end review post. See them plodding along doing nothing until April 19th this year. Then a steady week of increasing share price. For no reason whatsoever. Until an RNS on the 30th April about them selling their Real Shaving business.

How is it possible for the world to know of these events before they are released to the share market?

2014 Year End Review

noreply@blogger.com (dave) — Sun, 04 Jan 2015 15:26:00 +0000

“I don’t like piggy banks – I’m afraid of change!”

That time again to tie it all up and see if it was worth having my money in equities, rather than sticking it in the bank.

Here's what happened:

FTSE100 fell 2.7%
FTSE100 up 1.3% (total return, GBP)
FTSE-All World up 12.69% (total return, GBP)

Investimouse's fund which is a holding of investment trusts, tracker funds, bonds, fixed interest, and individual company shares is called The Team Dave Fund of Fun-ness. The individual company shares are generally high yielding quarterly paying shares (income is everything) but occasionally I do have a punt on something little. It is compared to the FTSE All-World each year rather than the UK only indices.

The Team Dave Fund of Fun-ness is up 14.76% this year (total return, GBP).

So slightly ahead of its comparative index. Still feel it needs more international exposure, but very pleased to do so well when everyone else is having a bad year.

Slightly annoyed last year about:

- Tesco - Clarke should probably be in prison, along with many of his cohorts.
- Bankers - I hate them all. Crowdfunding and individual finance can't come along soon enough and kill off their corrupt industry.
- The US justice system which continues to pick on BP despite their having made all of Florida an infinitely better place to live. Quite how BP are continually blamed for something American companies and employees caused is beyond me.
- Russia and Putin - madness
- Crawshaw - on the day I had researched it, Crawshaws price was 6p. At the last second I bought Tangent instead as my punt stuck for the year. Tangent earned me 25%, however Crawshaw would have ten-bagged my money. Sleepless nights.

Things I'm looking at this year:

- When exactly to go big on oil again. How long will Putin be happy with just fighting the Ukraine?More than likely his best option is to either rile the Iranians into attacking Israel (big risk) or start supporting ISIL and helping them create a larger conflict in the middle east, specifically by riling them up in Saudi Arabia. More unrest = higher oil price.
- Finger poised on the buy BHP button. Big divs, exposure to energy and all commodities.
- Creightons is my punt stock
- B&M European in retail looks good (I think...)
- Others which have me intrigued for 2015 are CityFibre, Telecity, Shell, Tungsten, Porta, Accumuli

Here's some share tips from round the media for 2014:

Daily Mail - This is Money tips
Guardian
Stockopedia - Top Naps
Independent - Top Ten to Follow in 2015
Telegraph - Questor share tips for 2015 (plus here's last year's results)
iii - Aim share tips for 2015

Some of the other blogger 2014 'year in review' style posts:

DIY Investor
Retirement Investing Today
Investing Sidekick
DIY Income Investor
Wexboy
Adventures in Equities
UK Value Investor

Good luck for the coming year!

And to end a superb cartoon from XKCD:

Poor share performance this year? It's all about bad management

noreply@blogger.com (dave) — Mon, 29 Dec 2014 13:53:00 +0000

It's been a year to forget for many big FTSE companies (Tesco, BP, Morrisons, Co-op, Barclays, etc.) Diving share prices for previous darlings of the sharemarket have made everyone a bit twitchy. Most of it can be blamed on bad management. The bastion of journalism that is the Daily Mail (hahahahahaha, ROFL) has gathered together a list of the retards and scum that control some of the UK's biggest companies.

It's not good reading and the biggest reason why the UK continues to flounder along. Bad management is endemic in the country. I can only guess why complete scumbags end up at the top of public companies. Here's a few reasons though:

- Clearly, almost none of management have 'skin in the game', you know real money invested in their companies so they all operate with a short term, scam-as-much-in-bonuses-as-I-can attitude. Fred the Shred Goodwin was the ultimate example of this.
- The Old Boys Network, nepotism, cronyism, etc. You name it the old pat on the back, you scratch me, I'll scratch you approach is rife in the UK. There's no meritocracy here and so the people who are least suited to leading are rewarded for their guile, cunning and poor behaviour.
- Bribery and Corruption - even companies which should be miles removed from bribery are well involved in it (GSK). You'd think the health and wellbeing of people would make you think twice about bribing people to use your products. Oh no, you thought wrong.
- The Class System - it still exists. It results in in-bred, backward idiots leaping ahead of the pack and gaining senior management positions.
- An inability of middle management to tell CEOs and corrupt boards to change their ways. Not sure why this exists but things are invariably too late when a 'whistle-blower' tells all.

I haven't even touched on the King of All Management Bastards, Bob Diamond, head of Barclays Bank who once paid himself £63M a year, decided that banks didn't need to apologise for their poor behaviours, and his bank while he was in charge was accused of rate rigging, money laundering, and tax avoidance.

These aren't just a few bad apples. They're everywhere. These are just the famous ones the media can be bothered to have a pot shot at. Every day you can check investegate and see the RNS of the public companies in the UK. I can't be bothered calculating it, but you can guarantee that about 10% of them each day are management awarding themselves additional share options, warrants, bonuses and other schemes to feather their nests.

I'm not sure why the UK tolerates it all and why workers don't demand better leadership.

Instead of whistle-blowing, rioting on the streets or burning down their offices they appear to be giving up and starting new decent companies. It's heartening to hear someone who actually might be a decent leader commenting on the growth of new companies. (it's in the last couple of paragraphs).

He adds: 'Last year there was a record number of new companies created. This year that record will be beaten. A recent survey by a quite serious authority rated Britain fourth best country in the world to start a business.'

'We've created more jobs in the private sector in this country over the last four years than the whole of the rest of the EU put together, which is an utterly remarkable statistic. It just shows that having a flexible economy with a culture that embraces entrepreneurship is a good thing.'

When Branson called 2014, the year of the Entrepreneur back in Dec 2013, it appears he may have been right.

Maybe we're heading in the right direction and these last seven years have been about getting rid of the blight that has infected the UK.

In the US, one company (Abbott Laboratories) seems to have the right idea and is training management not just on the job but in simulations too. You have to applaud the balls to try new things in management, you never know you just might find someone good. Besides they can't be as bad as the current batch.

A quick synopsis of stupid bloody Tesco

noreply@blogger.com (dave) — Thu, 25 Sep 2014 12:11:00 +0000

Unless your head has been buried in the sand (as mine was last week on a sunny island in the Ionian Sea) then you'll have noticed that Tesco has continued to add manure to the rather large fan it has constructed. The latest revelations? They can't add and just decided to guess how much money they had made in their latest interims.

While I'd like to think things can't get any worse, nothing at Tesco surprises me any more. They're the Barclays of retail now and consequently have the magnifying glass fully turned on them by the media and public. If something is afoot, it will definitely be found out, released and more damage will be done to their reputation, footfall, profits and share price.

I'd say it was time for drastic action. With a new CEO and CFO, take the time to clear the decks and release all the bad news as possible in one day. Sack the chairman who is clearly an idiot for allowing Clarke to eff everything up so badly.

The Previous Idiot

Take the hit, announce the new super plan (detailed below) the following week once everyone on the board of directors has announced they're buying £1m shares each themselves.

My SUPER PLAN of action would be this:

-Turn the Tesco mega boxes into Tesco property developments. Build houses around a typical small suburban shop area - have a Tesco Express, Tesco coffee shop, Tesco hairdresser and a couple of other shops. Make money by renting those and become Tesco Property. Easy.
-It's clear that the UK is now a mostly poor place to live in (outside London). Wages are low and being reduced on an inflation adjusted basis every few months. So it's time to compete with the cheaper end of the market (where Tesco began) and take on Aldi and Lidl, with a budget branded supermarket with limited range. Turn the stores that are in those areas and losing share into the cheaper brand. The rest of them can continue at the middle end in more affluent areas.
-Hire some people at the supermarket management level who actually care about them.
-Address customer service as quickly as possible.
-Tidy the stores up!!!!! Clean the aisles, stack at night, pick up the crap, put the rubbish away and not outside the door....

-Go back to being better than the rest as that's what made the difference to begin with. Competitive pricing, good stock levels, clean stores, helpful staff. This is so bleeding obvious.
-Are the little spinoffs of Tesco making money? ie. Blinkbox, Bank, Online, Delivery, etc.? If not, ditch them.
-Clean up the balance sheet. Start paying off some debt so you don't look like such a basket case.
-Is it possible to have some sort of employee ownership scheme like John Lewis - staff love working for them. Even just making a stand on short hours contracts - ditching them, getting the staff to love you, making yourself look good to the public again will help.

Morrisons and Co-op will eventually die. Sales and profits in the UK will pick up then with less competition. Globally Tesco should continue to do ok, so it's just a matter of time to see this out.

Will Tesco die like Woolworths? I don't think so, but it needs to kill off its weaker competitors as soon as possible.

I'm sorely tempted to buy more now...although to do so would be even more contrarian than buying Russia or investing in Syrian / Iraq housing.

Here's a roundup of everyone else's posts. They are all excellent pieces:

DIY Investor - Tesco Top Up Decision - he's all in again....
Under the Money Tree - Tesco Palaver - staying well clear for now...
Mark Carter - Tesco - keeps revising his valuation down (ahhh the benefit of hindsight)
Mark Ritson (marketing chap) - Tesco risks being famous for being broken - likens Tesco to Nokia, Blackberry, Woolworths and Northern Rock. Very pessimistic.
Expecting Value - Tesco, Yes Again - compares them to Man Utd's recent woes. Excellent.
Share Centre - Tesco's Comedy of Errors - thinks Dave will need to be bold and do something creative. Big fans of creativity here at Investimouse.

Oh well, it's only one company and nothing's permanent in this world. We'll move on to the next big thing I'm sure...

Portfolio - Half-Year Review 2014

noreply@blogger.com (dave) — Sat, 06 Sep 2014 07:35:00 +0000

Tiny bit late reviewing the portfolio as it's now September and not July 1st... oh well, that's the passive side of investing slowly winning over I guess.

Anyway, logged into i-Web this morning and ran a few reports to see what activity I'd made in the Team Dave Fund of Fun-ness portfolio in the first half of 2014.

So the fund is up 10.8% in the first half of the year. Which is good and pleasing but how did the overall world sharemarket do as our benchmark?

The ishares World Index ETF (the only world tracker I can find with reliable long term figures) has a performance of 5.16% for the first six months of the year. So we're up on that. Positive stuff.

Here's the activity from the first six months:

Sold Monitise in Jan - it's going nowhere, keeps diluting shares, but a decent gain and profit from them. Since dropped back a lot.
Replaced with SPDR Emerging Markets ETF.
Finally sold RBS in Jan - after a decent rally up to 380 I thought it time to end the folly of it. Getting rid of it was like a huge weight coming off your shoulders. It's done nothing since, its 'profits' are 90% lies and I feel better for no longer supporting them.
Sold COMS in Feb - for an excellent doubling of money.
Put that COMS money into HSBC as it dipped under 600p - I like the quarterly dividends. Neil Woodford has since dumped his stake. Worrying.
Bought TESCO in Feb - mistake.
Bought Middlefield Canadian MCT in Mar - nice timing.
Sold Blackrock Emerging Markets Track which had been replaced by the SPDR one.
Bought Infinis Energy in March - poor timing. Since dropped 10%.
Sold L&G Technology Tracker - no idea why now. It made decent money though.

Far too much activity by the looks of things. However, what I've learned is that decent timing gets great results. The holdings in Monitise and Coms were superb earners. More money gained than years of passive investing. Buying on dips in massive companies has been semi-successful too with HSBC in particular being a decent effort on timing.

It seems the maxim of Mr Buffet is true - buy great companies at a fair price.

In all a good 6 months. Where's the next bit of out-performance going to come from though?

The TSB IPO - Fancy buying a pukka bank?

noreply@blogger.com (dave) — Sun, 15 Jun 2014 13:52:00 +0000

The 17th June is the final day to decide whether or not you're participating in the TSB IPO. Once you've downloaded and spent the rest of the day reading the 300pg load of nonsense document you'll be none the wiser about what to do.

TSB is being sold off by Lloyds as punishment for being shafted by Brown and being forced to save HBOS during the Great Financial Crisis, they subsequently went broke and had to ask the state for survival funds. TSB was previously a mutual, then a bank and then succumbed to the excitement of the big bank mergers of the 80s-90s. What we are seeing now is a reversal of those big mergers and a general expansion of the number of banking entities as the new regulators attempt to encourage more competition and fewer companies that are too 'big to fail'.

So TSB - any good?

Here's the GOOD stuff about it:

- It's supposed to be a purely retail bank so no mucking about in the filth of investment banking.

- It is supposedly being sold on the cheap, at least the PR tells us it is 'priced to go' at about .7-.9 of book value.

- It makes money - about £170M last year and on course for £200M this year.

- It won't be tainted with any mis-selling dramas from the last few years.

- Long term holders will get 1 share for every 20 held each year for the next three years.

The BAD stuff:

- It revealed last week 45% of its mortgage loans are interest-only. This is INSANE. That's about 45% of its mortgage loans that it will never get its money back on.

- Competition is heating up. Tesco, M&S, Metro, etc. are all chasing new business too.

- Interest rates are on the move up. Mr Carney says so. Expect default rates on loans to rise as they do.

- There is some confusion as to how much they are paying for IT which is a huge cost for banks. Lloyds are currently subsidising / paying for it - when that arrangement ends, TSB will have to pay full whack.

- No dividends until a long time away - 2018.

- They tried to sell it a couple of years ago to Co-op for a boat load less. It wasn't worth £900M then, it's not worth more than that now.

- The market is fairly high at the moment. IPOs are dime a dozen as private equity groups look to cash in at the top of the cycle.

- Only 25% of the shares are being sold. Lloyds will retain the rest and look to sell them all over the next 12 months (I think that's the timeline, they have to sell soon I know). This enormous overhang of shares means there will almost certainly be a better time to buy (if you're keen).

- It's a bank. They can't be trusted. They're almost certainly lying about everything.

Updates on the Team Dave Fund of Fun-ness Portfolio

noreply@blogger.com (dave) — Thu, 15 May 2014 10:28:00 +0000

With the FTSE ticking along well and no serious dramas kicking off in the world (except poor old Ukraine who everyone seems to have turned their back on) all seems quite serene in the portfolio.

Updates on some of the holdings:
- Took the opportunity to top up HSBC when it dipped under 600p last week. Seemed wrong not to.
- Infinis has dropped 20% since purchase. Most of me says sell, but the reasons for buying in the first place stay sound - growth, industry consolidation. There has been no news. I think people are just bored. It has guaranteed to pay out big dividends this year and next so no reason not to be in it. Hope I haven't missed something. Maybe debt is too high?
- Schroder Real Estate had a successful placing which I contributed to. With shares at 50.25p, it was an instant 2p gain which has since gone higher. They are continuing to turn around this company and I'm hopeful that the problems of the past are behind them.
- Middlefield Canadian Income was bought at 98p. Seemed a no-brainer with 1.25p every quarter in dividends. The board thought so too and bought 50,000 shares at the same price along with a director who bought 100,000 at 102. The price has now crept back up to NAV at 108p. Nice one.
- Emerging markets seem to be recovering slowly and as I have quite a bit in two holdings (an ETF and
- Man Group continues to be the dog in my holdings. Only keeping it for the dividends now which I hope will be massive this year. They announced a second quarter of net inflows to their funds which means things are on the improve but it still feels like a basket case. I'm not sure any financial institution is investable other than HSBC at the moment. Even with RBS announcing make-believe profits again, there isn't any way you should be putting your money in any of them at the moment. Barclays unbelievably did another placing recently, announced sackings of 15,000 bankers and simultaneously reduced in real terms their dividend. More evil than any corporation that has ever bestrode the planet.
- the Saga IPO is uninvestable too. Too much debt, of which they are only paying back a tiny bit. Plus it will almost certainly list at between 17-20x earnings with no growth in the last three years. Madness - you can put your money in Beazley (or any of the other growing insurance companies), pay between 9-10x earnings and get fantastic dividends too. The only people getting rich at Saga are the private equity companies and the directors. Save your money people.

There's been no sales of any holdings for a while.

Are we getting toppy? Certainly the pull-back in tech and bio stocks in the US is a warning to them. At the moment though with the FTSE on an average of 14.5x earnings and paying around 3.5% in divs, there is no point having your money anywhere else.

Plenty of great things on the blogs around the world at the moment. As ever, I am in awe of the writing on Monevator and hang on everything Paul Scott has to say in his daily roundup on Stockopedia.

Book Review - 'Young Money' by Kevin Roose

noreply@blogger.com (dave) — Tue, 01 Apr 2014 14:16:00 +0000

Just recently finished this book so thought I'd share a few comments on it. You can of course read loads more reviews of it at Amazon if you like.

Kevin Roose is a New York magazine journalist and has a few other books to his name during his career, so has developed a style of writing that aims to give you the impression he has become embedded in his chosen field. In this book his target is to expose the world of investment banking from the viewpoint of the young graduates entering it. Following eight graduates over about three years during some of the most turbulent times ever in finance, we learn about their work lives and some small tidbits of the effect it has on them. It's an easy read, with small chapters that rock along very quickly following one of the participants at a time.

The majority of the graduates have come from ivy league universities at which investment banks tour in the year's preceding graduation to find their next crop of interns. Quite a bit of the book is given over to how the prospects are groomed at this stage, promises that are made, and the role of the university, the courses, and indeed the pupils role in expectations of a job after university. Kevin attends some of the career fairs at the schools to find out more about how the banks attract the highest talented students to apply for their roles. I've just done a quick troll of the internet for some of them and they seem super sophisticated affairs with huge websites devoted to them at each university.

What to wear to a Career Fair - Penn State advice

What's fairly frustrating with the book is that for the most part, none of the participants know each other so there's no chance to discover them as a group. Also with eight participants we don't really get to find out too much in depth about any of them. I guess Kevin has attempted to get a cross-section of new graduates and he has chosen people from different backgrounds (within what is obviously a limited scope, as the banks involved only select the creme-de-la-creme of society). In fact, really what you witness is how homogenous the group of supposedly disparate people are. They are all motivated by only one thing - money.

We learn that to get this money the investment banks require them to work ridiculous hours every week and that all of them work seven days a week. This un-written extreme hours contract exists between the bank and the newly hired graduate analysts / brokers for two years. At that point almost all the graduates are broken and exhibiting extreme behaviours, whether that be drink / drug related or stress disorders, and their relationships with family, friends and significant others has disintegrated. They are then expected to leave the banks and move to private equity, hedge funds or traditional finance companies. It's pretty short term based thinking that reflects badly on the banks and is fairly typical of their behaviour over the last 20 years. God knows how they think they're ever going to be stable entities without any long term thinking or career based occupations for their supposedly carefully picked graduates.

This short-termism is having an effect on the career goals of the graduates themselves. Most of them realise that they chose poorly at the beginning of their career and half of them leave to pursue other interests, specifically in the world of technology. I've written previously that the internet firms would steal the world's best minds from the other high paying jobs and this book confirms that this is happening. The world of startups, equity and being able to control your time involvement in the firm is extremely tempting after the jack-booted investment bank stereotypes many of them discover.

There's no ground breaking information here. I think everyone knew that i-bankers are expected to work mental long hours. However, as a book it romps along. Short chapters with interesting snippets of work behaviour. eg. crazy unreasonable bosses, excessive behaviour, amazing deals. We get snippets of the graduates outside life but don't get to know them terribly well, certainly not well enough to actually care about any of them. Most will recognise themselves in some of the characters - the inflated perception of one's abilities and talents when first leaving university and within weeks you discover that you know absolutely nothing about the real world can be disheartening, and the best bits of the book are when the individuals involved have that realisation.

The chapter on Fashion meets Finance is the most interesting; funny, clever and eye-opening. This is an event set up for hot girls to meet men involved in finance. It's as barbaric, money grabbing and sugar daddy seeking as it sounds and yet apart from one year at the height of the GFC its been a popular event. Unbelievably there has even been one in London last month. I have no idea it it was a success or not.

As a whole Young Money is worth a read.

Portfolio Adjustments - March 2014

noreply@blogger.com (dave) — Wed, 19 Mar 2014 11:44:00 +0000

Over the course of the last month Investimouse has sold out of Tangent Communications (TNG:L), the London based digital media and print company. Results are good, a better dividend is expected this year and they are starting a share buyback in the coming months. Bought at 9.1p, sold at 11.3p - so a rise of about 25%. I hope I don't regret selling early but a recent RNS which stated that there were over £3.5M in phantom options payable to two directors in the coming year spooked me. That would completely wipe out profits in the group and made it a bit uninvestable until those are gone.

Investimouse also sold out of Coms (COMS:L), a superb little earner, which in just over a month doubled in price. Suppose I could have held on for more of the recovery but feel that the valuation had started to get miles away from itself.

To replace these Infinis Energy (INFI:L) is now in the fund purchased at 246p earlier in the month. Think it could be an excellent long term hold for both yield and growth. As an energy play it's always going to be a little at the mercy of government whims but it has decent growth plans with new power plants expected to add another 500MW of generating capacity. It may also end up being an excellent consolidator of all the other little renewable energy firms in the UK.

In addition more money was put into Merchants Trust (MRCH:L) and new money was found for a small stake in Middlefield Canadian (MCT:L) which I hope will be a nice safe high yielding trust. Paying guaranteed 1.25p quarterly dividends it yields at around 5% at the moment which should do me fine for the next few years.

Portfolio Review - 2013

noreply@blogger.com (dave) — Tue, 04 Mar 2014 13:42:00 +0000

Man,its been ages since I posted on Investimouse. Shame on me. I've still been active in the market and trying to make more money through investing, saving and financial austerity, yet the real world, and work have intervened to stop me posting.

Anyway, how did 2013 go for the Team Dave Fund of Fun-ness portfolio?

The fund ended up 20.51% in 2013. Damn pleasing and the best performance since 2010. Considering the number of fixed interest holdings and dividend income shares I have now this seems a very impressive performance. But how did it do against the benchmarks? After all, unless you compare yourself to the market, you may as well have been buying a single FTSE100 tracker or similar.

According to Google Finance:
- the FTSE100 was up 13.9% for 2013.
- the All Shares Index was up 16.2% for 2013.
- the S&P500 was up 38.1%
- the World Index was up 26%. (although I'm not sure if this is accurate - struggling to find a perfect measure).

Clearly the place to be was the US in 2013. I've been gradually reducing my exposure to the US (mistake!) as I felt it was incredibly over-valued. The PE for the S&P is a good 25% above the average and that has to mean that things are going to go wrong soon, or so I thought.

The continuing improvement in the World Index continues to nag me. My portfolio consists of a bunch of investment trusts and low cost emerging country tracker funds that could probably all be done away with and replaced by the iShares World Index ETF.

Investimouse holds its shares in the Team Dave Fund of Fun-ness ISA through the iWeb platform. Loads of changes are happening right now due to the implementation of RDR in the UK, basically meaning we all pay a bit more for buying funds, holding shares, etc in our ISAs. I'm sure this wasn't the intention of the good natured law makers but that's what is going to happen to me. I've investigated moving the ISA again but feel that overall iWeb will probably still be just about the best platform to stay with for the size of my holdings. Plus the drama of it all when moving last time from iii to iWeb has put me off ever wanting to do it again!

The last time I had to shift platforms I produced a Google spreadsheet that was a big online hit with people caught up in iii's platform fee charges. This time the good folks at Monevator have an excellent comparison tool that could help you with figuring out who to hold your shares with and place your transactions through.

Bogleheads - What's that all about?

noreply@blogger.com (dave) — Mon, 04 Nov 2013 12:06:00 +0000

There's a thoroughly decent article which is worth a read over at Forbes magazine from last week on the cult of Bogleheads.

Bogleheads are a group of people (now numbering in the hundreds of thousands) who have adopted Jack Bogle's methods in their investing and everyday life. Their site is nothing to look at but is full of useful gems of information, tips and deals, and good wholesome advice. Most of it is focused on the Amerian market

Forbes has broken down their credo into the following 10 points. I won't elaborate further on them as they're explained in the article but the headings alone give decent advice for a prosperous life.

1. Live below your means.(Big fans of that here at Investimouse)
2. Cost matters.
3. Buy the market/diversify.
4. Don’t look at past returns to gauge future performance.
5. Never try to time the market.
6. Stick to your goals.
7. Save as much as you can, as early as you can.
8. Look at the big picture.
9. Automate good behaviours.
10. Minimize taxes.
Lots of good passive investing advice really. Keep your costs low, invest regularly and often, don't try to time the market and keep diversified.

Can we predict the next financial crisis?

noreply@blogger.com (dave) — Tue, 25 Jun 2013 08:41:00 +0000

Here's a recent TED talk from risk economist, Didier Sornette. Didier runs the Financial Crisis Observatory which has plotted a set of early warning signs for unstable, growing systems, tracking the moment when any bubble is about to pop. Not just bubbles in finance but all over the place throughout different systems in the world.

It's worth a watch if only so you can either:
a) marvel in amazement at his predictions,
b) shout bullshit at the screen, or
c) be astonished that there doesn't seem to be any actual science or presentation of what, how or why he declares anything a bubble and the mathematical point at which it will break.

The comments on the video are excellent and you should jump in and join the discussion there. Most interestingly, he puts up a slide on the bubble of human population and then doesn't actually talk about it. Clearly this is the biggest and most damaging bubble that mankind faces and it would be interesting to find out more at what point the human exponential population explosion bubble is going to pop...

Portfolio review - April 2013 Update

noreply@blogger.com (dave) — Wed, 29 May 2013 06:32:00 +0000

General boost from all markets heading upwards slightly in March so the team dave fund of fun-ness rose slightly too.

Free money from the following companies:

Raven Russia prefs (RUSP)
Natwest prefs (NWBD)
Beazley (BEZ)
Real Estate Credit Investments (RECP)

for a total of £97.03 in dividend income (a new monthly record). Thanks mostly to the good chaps at Beazley who seem determined to make sure I get rich. Nice one them.

No other action this month. I have a tiny amount of cash sitting on the sidelines awaiting buying opportunities but I can't see anything obvious at the moment.

The importance of reading to get smarter

noreply@blogger.com (dave) — Thu, 16 May 2013 08:06:00 +0000

picture borrowed from an aussie paper

Just found this really nice article on a blog I hadn't previously heard of called Farnam Street. It's an easy read so won't take up too much time in your life, but has quite a few salient points.

The Buffett Formula — How To Get Smarter

My take from it:

- Nothing is easy in life. You don't get to become some of the wealthiest people in the world without a lot of work.
- Reading and continuing to read is the source of their knowledge. Munger and Buffett don't have supernatural investing powers, they just have a capacity to read vast amounts to gain knowledge.
- Read the facts not the opinions of others on those facts.
- Find the time to read even if it means sacrificing something that you gain pleasure from or might otherwise derive some greater short term value from. It's the long term that counts.
- Using that knowledge wisely is what separates them from others.
- Surround yourself with smart people