No lessons learnt from Europe then!
And, despite the positive noises it will be interesting to see what kind of deal has been done, whether it gets through the House of Representatives in one pass, and how much has been rolled up and "kicked down the road".
One can't even describe it as last minute as, ultimately, they are managing to use more time than was allotted given that the House of Representatives had shut shop for New Years Eve whilst the Senate thrashed things out, thereby "technically" allowing the U.S. to go over the fiscal cliff.
It all does little to change my view that, when discussing politicians the world over, one must always ask the question as to whose interests they are primarily acting upon: their electorates or their own!
2012 is now history though and we seem to have come through relatively unscathed given the various expert predictions of: a Greek exit, the collapse of the Euro, a Chinese hard landing, and a fall over the fiscal cliff.
Any and all of which could yet happen in the coming months and years but serves to underline that nobody is 100% certain of what might happen and sentiment is often just sentiment and therefore subject to change.
Back to the task at hand though and, following a very small decline in December of -0.1%, my portfolio gained 16.68% for the year, which is still well shy of the 18.61% peak for the year seen on the 14 September.
As always drilling down and reviewing the portfolio's individual components reveals a mixed bag of performances with strong 12 month gains from William Hill, Aviva, R-R, Apple, Centrica, GE, and National Grid, but quite a few under-performers as well.
More concerning, is that some of these under-performers have now performed equally badly over 2 years.
Its a huge shame that R-R and Apple couldn't hold onto their all time highs though, which in turn, could have comfortably pushed my portfolio to all time highs.
The under-performers include: BG Group (production delays), Vodafone (revenue, liabilities, and anticipated 4G costs), and the supermarkets: Tesco and Morrisons (price competition), which are all showing double digit 1 year falls which I see as short term, cyclical, and relative to the current economic environment.
And, putting BG to one side, the remainder "currently" pay healthy dividends which can only help to compensate me for my patience.
Fortunately, I also have BAE as a good example of a share which has flown a similarly turbulent course of under-performance over the last couple of years but is now starting to contribute to the portfolio's upside.
I say fortunately because it gives me a first hand example of the fickle cycling of sentiment out of some shares and into others which feeds my view that many of the under-performers will recover as/when sentiment and perception changes.
Elsewhere, BP continues to climb its way out of the long deep well of its own making, IG Group still seems friendless, and Microsoft tries to shape its own Windows framed view of the future following the launch of Windows 8 across desktop, tablet, and smartphone platforms.
Dividends have also continued to roll in with December contributions from William Hill, Microsoft, BP, and Tesco.
Which reminds me that, of my portfolio's 16.68% gain, 4.32% came from dividends.
So that's a 12.36% capital gain and 4.32% dividends.
| Merchant Adventurer's Index | ||||||||
| Forecast | 1 month | YTD | 24 mth | |||||
| Price | % holding | Div. yield | % gain | % gain | % gain | |||
| R-R | 875.50p | 32.15% | 2.24% | -1.91% | 17.01% | 40.21% | ||
| National Grid | 703.00p | 17.22% | 5.82% | -0.21% | 12.48% | 27.12% | ||
| Aviva | 373.00p | 12.20% | 6.97% | 6.45% | 23.42% | 10.40% | ||
| Apple ** | $533.03 | 6.44% | 1.47% | -7.24% | 18.04% | 35.31% | ||
| BP | 424.80p | 5.17% | 5.00% | -1.56% | -6.50% | -7.19% | ||
| IG Group | 450.00p | 4.51% | 5.00% | 6.31% | -1.69% | -5.70% | ||
| William Hill | 348.10p | 3.61% | 3.22% | 3.23% | 71.65% | 103.93% | ||
| General Electric ** | $20.99 | 2.35% | 2.77% | -1.64% | 12.60% | 32.71% | ||
| Centrica | 333.60p | 2.33% | 4.90% | 2.46% | 15.31% | 0.60% | ||
| SSE | 1418.00p | 2.18% | 5.93% | -0.49% | 9.84% | 15.76% | ||
| Microsoft ** | $26.73 | 1.89% | 2.85% | -0.46% | -1.07% | -7.67% | ||
| BAE Systems | 336.90p | 1.87% | 5.78% | 2.93% | 18.17% | 2.09% | ||
| Morrisons | 263.00p | 1.85% | 4.49% | -2.12% | -19.37% | -1.72% | ||
| Vodafone | 154.45p | 1.67% | 6.96% | -4.16% | -13.67% | -4.15% | ||
| BG Group | 1012.50p | 1.65% | 1.58% | -5.33% | -26.44% | -21.88% | ||
| Tesco | 336.00p | 1.49% | 4.42% | 3.37% | -16.72% | -15.77% | ||
| Cash | 1.42% | 0.00% | ||||||
| 100.00% | 4.03% | |||||||
| 1 Month | YTD | 24 mth | ||||||
| Virtual Portfolio gain (incl. Dividends) | ||||||||
| - 1 month gain 1646.20 - | 1644.62 | -0.10% | ||||||
| - YTD gain 1409.55 - | 1644.62 | 16.68% | ||||||
| - 24 month gain 1264.20 - | 1644.62 | 30.09% | ||||||
| - 36 month gain 1000.00 - | 1644.62 | 64.46% | ||||||
| FTSE gain (excl. Dividends) | ||||||||
| - 1 month gain 5866.82 - | 5897.81 | 0.53% | ||||||
| - YTD gain 5572.28 - | 5897.81 | 5.84% | ||||||
| - 24 month gain 5971.01 - | 5897.81 | -1.23% | ||||||
| - 36 month gain 5412.88 - | 5897.81 | 8.96% | ||||||
| Transactions: | ||||||||
| 08/12/2012 | Div | William Hill @ 3.4p per share | ||||||
| 20/12/2012 | Div | Microsoft @ 12.12p per share | ||||||
| 21/12/2012 | Div | BP @ 4.47p per share | ||||||
| 21/12/2012 | Div | Tesco @ 4.63p per share | ||||||
| 31/12/2012 | Buy | Apple Inc @ $524 | ||||||
| Notes: | ||||||||
| * US Dividends are adjusted for exchange rate and 15% withholding tax | ||||||||
| ** Sterling : Dollar exchange rate = £1: $1.617151 as at 31/12/12 | ||||||||
Looking at the performance chart gives me a little more satisfaction with my portfolio's 16.68% gain (dividends re-invested), given that the FTSE100 (excl. dividends), has advanced just 5.84% in 2012.
Over 2 years the FTSE100 continues to be down -1.23%, on the 5971 it stood at on the 31 December 2010.
-1.23% compares even more unfavourably with the 30.09% dividend re-invested performance that my portfolio has recorded over the same 2 year period.
Over 3 years the comparable numbers are 8.96% v. 64.46%!
And, whilst the FTSE100's performance might re-enforce the argument of the "gone nowhere" brigade it has re-enforced my belief that dividends and their re-investment are a very significant contributor to compounding and year on year gains.
After all, the FTSE100 has also paid annual dividends in the region of 3.5-4% which could also have been re-invested.
 |
| Click to enlarge, close to return. |
I would also suggest that the regular flow of dividends into my portfolio has helped to reduce the temptation for me to trade in/out of individual holdings to keep liquid/realise profits, as I can always see where my next investable tranche of funds are coming from.
A forward forecast yield of 4.03% (see above table), should give me a couple of tranches to invest.
On that score I can see that I made just 6 trades this year: 1 sell and 5 buys, with the last surprising buy coming inside the last 2 market trading hours of 2012 which I will pick up later.
This 6 trades compares to the 5 trades: 1 sell and 4 buys, I made in 2011
As mentioned earlier, dividends also help to provide a partial return for my patience as well.
I've also mentioned the under-performance of some investments and the recovery that can occur, and it is more recovery that I am hoping for as I look ahead to 2013.
In particular, I am looking for Aviva, BP and IG to contribute to this coming year's performance.
Fingers crossed that dividend cuts will be rare and have minimal impact, and that the portfolio's yield increases but, it seems fair to say that recent sentiment is influencing widespread downgrades in analysts' forecasts.
I'll also be interested to see if the U.S deal includes an extension on the current rates of tax on dividends, and capital gains, and if/when any proposed increases are anticipated.
If the so called fiscal cliff has been postponed then, in the short term at least, I can start to look forward to January given the dividends due from Rolls-Royce and National Grid.
| Ex Div. | Company and payout | Due date |
28-Nov 20-Dec | R-R @ 7.6p per share Vodafone @ 3.27p per share Nat. Grid @ 14.49p per share GE @ 19c per share | 04-Jan 06-Feb 16-Jan 25-Jan |
It all starts again tomorrow though so I will take my leave now and wish you all a Happy and Prosperous New Year!
Links to Portfolio updates:
- November 2012: Portfolio Update
- October 2012: Portfolio Update (The Long Haul).
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