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Over the past few days, the ol’ portfolio has come screaming back.
This was after seeing a super 30 per cent profit dive to yearly returns barely scraping in at low single figures.
When you’re loading up on bigger positions it’s harder to make accurate yearly return calculations, so I tend to use time-weighted calculations. So without attacking a spread sheet and doing calculus it appears I’m back into the teens again on an annualised basis.
Of course, I think this is in part due to my stock picking. But the environment is so toxic that you can be dead right and end up dead anyway and dead wrong and an apparent superstar.
The markets are not running efficiently anymore because the market economy we live in is no longer a free market. Governments are fixing bonds and currencies and messing up the whole efficient causality we once enjoyed.
This means risk no longer equals reward. Or, rather, risk doesn’t equal reward in the short run, the underlying issues make things take much longer to get to their correct price and makes the ride getting there more varied.
This means I can look either an idiot or a genius at random for a longer period than in an efficient market period, when I would reap my rewards in a less scary way; a smoother fashion at a faster pace.
Anyway, it feels good to be an artificial maestro again, at least for a bit.
The Cable and Wireless gambit paid off. The takeover is going through which was fortunate as I loaded up on the basis it would. Pace is going gangbusters, which is possibly a sign of something in the works.
I’m also sat on a lot of good, ‘beaten up’ stocks who hopeless optimists would say were coiled springs.
I’ll be happy to keep a 15% yearly return this year, under the circumstances. It will worry me however, as it is the low end of my usual performance. Fifteen per cent and a smooth ride would be less bothersome, but the bone shaking ride I’m getting has stripped a lot of confidence from my investing style.
I see an obvious long and I’m simply ignoring it. It needs to absolutely scream at me to drag me in. I’m being kept out of my favourite pastime by the overbearing risks. It is like playing on a crocodile infested golf course.
Bear markets are just no fun!
