Another roller coaster of a month for markets but, despite a monthly deterioration, the portfolio has managed to cling onto positive territory for the year to date albeit a minor 1.29%.
The FTSE continues to swing wildly and fell by 4.93% in the month to finish at 5128.48. This mark also continues to be below the 5412.88 that the FTSE recorded on the 31st December 2009.
The first few days of October have once again mocked me as markets have declined on fears of Greek default and another credit crunch as Belgium bank Dexia flirts with collapse, the Eurozones continuing failure to take decisive action on the fate of the Euro, Greece's place in that, and the future level of Greek debt v. Bank liabilities.
The investment compass is totally lost at the moment as every type of investment swings wildly. Shares, bonds, commodities and even gold continue to swing by sizeable percentage points on a daily basis.
The dollar is currently strengthening as a seeming safe haven?
I do find it very hard to believe that "traders" can seemingly move so quickly in and out of investment classes or even that there is a collective mind behind a complete sell-off in shares.
I have never been certain whether this is market maker dealing, automatic triggers by computerised systems, leveraged instruments or a combination. Whatever it is, it isn't rational and is truly scary at times.
As reported in August's update Cisco has gone and has been replaced by General Electric. And, a further investment in Aviva now means that the Portfolio is fully invested.
I have been feeling my head for bumps since investing further in Aviva but have stated a number of times that I am genuinely trying to change my investing behaviour which means I am trying to view these falls as buying opportunities (see Market Update: Is it time to be greedy?) and I feel Aviva's sell-off is overdone.
It is highly likely that you will not manage to find the bottom of the market, or even of a share price, when investing during these periods though.
Its not much but you can at least be certain that you haven't bought at the top!
It would be comforting and ego massaging to always buy at the bottom and just watch an investment appreciate but this is almost impossible to achieve and this greed (or fear it might fall further), can be the difference in getting hold of what you believe to be a long term winner or missing out.
Its not much but you can at least be certain that you haven't bought at the top!
It would be comforting and ego massaging to always buy at the bottom and just watch an investment appreciate but this is almost impossible to achieve and this greed (or fear it might fall further), can be the difference in getting hold of what you believe to be a long term winner or missing out.
As markets have shown recently it seems impossible to predict which direction they might go in on a daily basis seeming to react differently on different days to the same commentary. Which leaves the only view that matters as your own and where you think a company or an index will be in the future?
Unfortunately, these buying opportunities (if that is what they are) always seem to coincide with the end of the world being just around the corner!
Anyway back to the portfolio, dividends came in from Invesco Perpetual (re-invested), BP, Microsoft, and Scottish and Southern Energy.
In a change to the table statistics I have started to record a dividend yield for Invesco Perpetual. These are Accumulation units so dividends are re-invested.
When I first invested in them I didn't appreciate that the dividends would still be issued (albeit on paper) before re-investment which means that there is a potential tax liability for high earners if the units are not held within an ISA.
When I first invested in them I didn't appreciate that the dividends would still be issued (albeit on paper) before re-investment which means that there is a potential tax liability for high earners if the units are not held within an ISA.
As for how I am measuring the yield I am using the last 2 payments so am showing a historical actual yield for the investment which is different to the consensus forecast that I am using for the remainder of the portfolio.
Along with recent dividend yielding investments it does serve to hike up the portfolio's forecast yield (if held for 12 months) to 4.42%.
Given the current climate I have to add a caveat here though that dividends can be cut!
Elsewhere, Apple at $381 and supported by a strengthening dollar again breached the 100% gain threshold for me but have since wallowed following the disappointment of IPhone 4s being announced but no IPhone 5.
Following the sad news of Steve Jobs passing I am actually wondering if IPhone 5 has been held back in the knowledge that Jobs illness was reaching its end. Not sure why I think that but it did occur to me. But, it could still be down to problems as rumours suggest.
I'm not about to jump ship on Apple but will, as suggested previously, need to keep a close eye on Jobs legacy.
National Grid continues to be the star of the portfolio during the current chaos (see Boring old National Grid: up 15.73% year to date!) for which I am grateful.
I don't expect it continue that way should markets start to recover or for it to continue to be immune in any further escalation to the current situation but it has performed very well through this year.
The only other investment worth a mention at this point is Vodaphone which is around 3% up now.
With a forecast yield of 7% and a p/e of 10.6 times I am looking for between 10 and 15% per annum from Vodaphone as it comes through the other side of its strategic review of minority operations to refocus on growing its revenues.
And, as a bonus there is an additional 2% special dividend to come in January following a payout from its 45% stake in Verizon Wireless (the 2nd largest US wireless carrier). There is still debate about whether this is a resumption of dividends yet but bodes very well for the future and should add significantly to Vodaphones income.
I have also added period end prices to the table.
| Forecast | 1 month | YTD | 21 mnth | ||||||||||||
| Price | % holding | Div. yield | % gain | % gain | % gain | ||||||||||
| R-R | 595.00p | 28.13% | 2.89% | -7.03% | -4.49% | 23.06% | |||||||||
| National Grid | 638.50p | 20.09% | 6.13% | 2.82% | 15.46% | 17.64% | |||||||||
| Aviva | 305.40p | 7.96% | 8.84% | -8.21% | -14.75% | -12.76% | |||||||||
| Inv. Perp. High Inc. *** | 483.92p | 7.06% | 3.96% | 2.20% | 2.21% | 14.53% | |||||||||
| Apple ** | $381.18 | 4.46% | 0.00% | 3.35% | 18.30% | 101.91% | |||||||||
| BP | 388.50p | 4.07% | 4.51% | -3.47% | -16.55% | -10.75% | |||||||||
| IG Group | 447.10p | 3.39% | 4.77% | -0.02% | -12.33% | 48.60% | |||||||||
| William Hill | 226.20p | 3.02% | 4.05% | 0.22% | 32.51% | 32.29% | |||||||||
| Centrica | 297.70p | 2.67% | 5.13% | -0.50% | -10.22% | -5.74% | |||||||||
| Morrisons | 290.50p | 2.62% | 3.70% | 0.52% | 8.56% | 14.81% | |||||||||
| BG Group | 1241.50p | 2.59% | 1.18% | -6.79% | -4.21% | 13.89% | |||||||||
| Scottish and Southern | 1295.00p | 2.56% | 6.25% | -0.38% | 5.71% | 12.52% | |||||||||
| Microsoft ** | $24.89 | 2.35% | 2.14% | -2.11% | -10.76% | 3.52% | |||||||||
| Vodafone | 166.25p | 2.30% | 6.59% | 3.26% | 3.17% | 3.17% | |||||||||
| General Electric ** | $15.48 | 2.31% | 3.09% | 1.59% | 1.59% | 1.59% | |||||||||
| Tesco | 378.00p | 2.16% | 4.13% | -0.16% | -5.24% | -5.24% | |||||||||
| BAE Systems | 267.30p | 1.91% | 6.91% | -2.91% | -19.00% | -16.27% | |||||||||
| Cash | 0.36% | 0.00% | |||||||||||||
| 100.00% | 4.42% | ||||||||||||||
| 1 Month | YTD | 21 Mnth | |||||||||||||
| Virtual Portfolio gain (incl. Divs) | -2.10% | 1.29% | 28.06% | ||||||||||||
| FTSE gain (excl. Divs) | -4.93% | -14.11% | -5.25% | ||||||||||||
| - 1 month gain 5394.53 - 5128.48 | |||||||||||||||
| - YTD gain 5971.01 - 5128.48 | |||||||||||||||
| - 21 month gain 5412.88 - 5128.48 | |||||||||||||||
| Transactions: | |||||||||||||||
| 01/09/2011 | Divs | Inv Perp @ 11.53p per share | |||||||||||||
| 02/09/2011 | Buy | General Electric @ $15.74 (1.61943) | |||||||||||||
| 07/09/2011 | Buy | Aviva @ 310.42p | |||||||||||||
| 13/09/2011 | Divs | Microsoft @ 8.53p per share | |||||||||||||
| 20/09/2011 | Divs | BP @ 4.32p per share | |||||||||||||
| 23/09/2011 | Divs | SSE @ 52.6p per share | |||||||||||||
| Notes: | |||||||||||||||
| * US Dividends are adjusted for exchange rate and 15% withholding tax | |||||||||||||||
| ** Sterling : Dollar exchange rate = £1: $1.5579 as at 30/09/11 | |||||||||||||||
| *** Invesco Perpetual Accumulation units (Dividends re-invested). Yield shown is based upon most recent payments. The performance of the portfolio relative to the FTSE100 continues to be very pleasing. The profile and direction of the 2 indices continue to be similar but the FTSE appears to be much more extreme in its movements on the downside. This probably has a lot to do with hard hit sectors like Banking and Mining which aren't really represented in the portfolio with the exception of Aviva which appears to be similarly affected by the sell-off in financials.
Looking forward the key requirement appears to be confidence. Confidence that is, that Governments and Central Banks have the will and the resources to provide a safety net to consumer, corporate, and sovereign debts which, despite the pain of the credit crunch is seemingly immeasureable and still expanding. I am not sure that satisfying markets and speculators in the short term just because "thats what they want" is the right solution though. At least not without a change in attitudes and expectations which seems to be the biggest failing of the last banking bail-out. If nothing else it would seem only to serve to make a bigger bonfire for "next" time by putting another sticking plaster over the immeasureable and growing mountain of debt that itself is just a symptom of the real issues of unrealistic expectations, greed, and a dog eat dog attitude with minimal social and corporate responsibility. All of these "victims" need to take responsibility (rather than rely on the next bail out) and put their own houses in order if real growth is ever going to be achieveable and sustainable again. For myself, it would be nice to see some sanity and rationale restored. Related Posts: - Market Update: Is it time to be greedy? - Market reaction to Bernanke keynote speech is just bizarre! - Contagion Flu!
Links to previous Portfolio updates:
- May 2011: Portfolio Update- April 2011: Portfolio Update | |||||||||||||||
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