Its Not Harry

Comment and opinion for retail investors in the UK

Mark Potter

At the Whiteboard – Assessing Fund Performance

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I noted when reading the material about portfolio reviews which I reminded you about at the start of the month that I had not, in fact, published a promised follow up with guidance on reviewing portfolio holdings that were not performing as expected.

I must get a pointer like that!

This is an important exercise but one that depends to a degree on experience and some applied knowledge of what actually influences portfolio outcomes. A comprehensive retelling of all the data I would want to look at and how I would interpret it all would make for a very long piece indeed. That was not what I promised!

I have instead made a 17 minute video that suggests one technique that allows one fund to be scored against another, the seond in effect serving as a benchmark. After all, if you sell out of a fund, then you usually want to invest in something else.

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September 2025 – Back to school!

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Introduction – Pick and Mix Revision

This month, I don’t have anything interesting to write about in the style of the Deep Dive longer articles that I usually start the month with, so I am allowing you a choice as to how much time you spend on your investment portfolio management education.  I thought it would be useful to offer what might be taken as a revision list or a prompt to put in place some processes that make sure you are continually and effectively on top of your portfolio. 

Because I have written and published on this web site a great deal of material and some very specific guidance on the various essential aspects of portfolio maintenance, much of what I would like you to review will be referenced by links to articles of various lengths.

You can decide exactly how much you want/need to take in as your personal refresher course and then reference the relevant articles, spreading the readings over a few sessions if you prefer.

Not everything that I currently think is important is already on record, so the second part of this month’s briefing does add some new suggestions.

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YAP – the importance of market sentiment

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Below are charts for the share prices of 3 truly global companies – one is actually the largest company in the world by capitalisation – note the 4.4T valuation! The others are not small at around 200 billion. The first 2 charts are over one year and the last is over 5 years for reasons that will become clear.

What these charts show is that the short term share price momentum is driven by what the markets thinks is going to drive profits in the future. It is also possible to note that a good business can still make solid returns on average even after a momentum ‘climb’ fizzles out, but that depends on its operations being widely based.

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Deep Dive – August 2025

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Introduction – European Focus

This month’s longer post is dedicated to the outlook for European (including the UK) markets for the rest of the year, based partly on the Morningstar webinar presented a couple of weeks back, from which I have extracted and in some cases further interpreted or extrapolated, my own selection of important pointers and data.

Note that the presentation was delivered just before Trump’s threat of 30% tariffs on the EU if a trade deal had not been struck by the end of July.  As I wrote this piece, an outline deal had been announced, with a general tariff set at 15% but various significant issues still outstanding.

The main webinar presenter , Michael Field, Chief Equity Strategist at Morningstar Europe, did (in mid July) make the point that a ‘blow up’ in trade relations with the USA was a distinct possibility!   I think the outline deal that we know about as I write this piece is being taken, or at least presented, differently in the various major European states, but perhaps the provisional outcome is not so much a ‘blow up’ as a potential set of hurdles that will impact trade in ways yet to be fully understood, possibly only temporarily.

The Main Points

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YAP – (Almost) nobody expects the unexpected!

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The chief ‘weapons’ of a stock market correction are surprise, or fear and surprise, or …. (please carry on based on your familarity with Monty Python).

I should say that a logically predictable inflection point in the normal market cycle that can be anticipated is clearly not a surprise to the well informed (for example October 2021) but a ‘crash’, such as in October 1987 or the onset of the great financial crisis of 2008 will be unexpected by many market participants and that is the very reason that it progresses to become a severe valuation reset that may go on for as long a several years. In simple terms, there is panic.

‘The Impact of the Highly Improbable’ is a now legendary book by Nassim Taleb that formalised the Black Swan theory, essentially the idea that outlying events, or those deviating from common and current experience may have a disproportionate impact on perception and in consequence reactive behaviour.

The idea is not that black swans are unknown (apparently, they were known about by the Romans) but that in regions where white swans are seen daily in numbers, suddenly seeing a black swan comes as a shock and is almost never anticipated (because how could you?).

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