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Its Not Harry

Comment and opinion for retail investors in the UK

Portfolios

Deep Dive – June 2024

2nd June 2024 by Mark Potter Leave a Comment

KISS – Keep It Simple, Stupid!

The heading is a reference to the mnemonic widely used in training courses, mainly sales and marketing variants, in the latter part of the last century.  Many readers will know it, I am sure, but for those who don’t, the idea is that only simple concepts are readily understood by prospective customers and so if you want them to be attracted to what you have on offer, you need to have a marketing message that conveys simple benefits, like “Persil washes whiter” or “Every little helps”.

It is true that some consumers, like myself, actually enjoy looking into detail and researching products, but I would happily admit that I am attracted to simple solutions in the investment world, knowing that complexity often allows product manufacturers to rip off consumers or permits the disguised conduct of fraudulent, or at least negligent fund management activities that go undetected, as for example happened with split capital investment trusts.

It doesn’t need to be complex – just logical

For Portfolios

Last month’s Deep Dive article listed some options for those who might want to simplify their investment affairs as advancing years make things more difficult.  Here were two of the options:

  • Move to multi-asset funds, either those built with passive index-tracker components, or managed variants.
  • Continue to retain a portfolio of funds, but much simplified, using 6 -10 funds which cover all the main global markets

This month I want to share with you some data that I researched after thinking more about how investors with slightly differing characteristics and objectives might actually go about the process.

I also wanted to do some more validation on my recent affirmation that investing in a way that meets a desire to support sustainable or general ESG objectives would not result in weaker returns and in fact might deliver better results. 

I was especially motivated to do this after reading a trade press report of an IFA who claimed that ESG investing was pointless and a scam.  When opinions about investments are polarized, one can as rule assume that the quiet but active majority (being motivated as a whole by the prime objective of making money) will come out on the winning side – that is in fact the essence of the momentum factor as a driver of investment valuations.  It seems that in Europe at least the majority prefers sustainable capitalism.

In the spirit of the heading, this article is in itself a little shorter than recent monthly missives.  Feedback on your preference for levels of detail is always welcome.

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Filed Under: Asset Allocation, Education, Members Only, Monthly commentary, Passives and Trackers, Portfolios, Sustainability/ESG

YAP – a geographical shift?

14th May 2024 by Mark Potter Leave a Comment

Readers will know that serious investors do not shift their asset allocations around and trade in and out of funds frequently just because of a change in short term factors. In my training I suggest having a high level asset allocation target for each main investment sector that is of interest and relevant to your objectives and to then monitor, using some sort of recording system, how your actual portfolio compares with the targets.

This is not a strict science, but part of the ongoing process of diversification and risk control.

Something I have noted from the mass flow of media data that I see

I remind you of this because I want to call your attention to what I see as being subtle changes in the thinking of the professional investment community on the relative value of North American versus European and UK markets.

I am not suggesting that you are likely to react by making major changes to your asset mix, but that you might find this helpful context in making those minor course corrections that keep the portfolio supertanker heading smoothly for its long term destination.

[Read more…] about YAP – a geographical shift?

Filed Under: Markets, Members Only, Monthly commentary, Portfolios

Deep Dive – May 2024

30th April 2024 by Mark Potter Leave a Comment

Out of this world

This month I am going to address a subject that no-one really likes talking about but which I think I have a responsibility to address because I and my subscribers are all getting that little bit older.

As the Pink Floyd lyric goes ‘another day older, another day closer to death’, which is just a truism, but as we get into our 60s and 70s and beyond (and most of my subscribers are in that age group), the number of days is not so many as it was. 

All is going swimmingly, until it isn’t….

I know from you, my readers, that one of the principal concerns people have when they start running their own portfolios is that, although it is not so difficult when you have some training and have accumulated a bit of experience, it is unlikely (although not so in every case, I know) that a surviving partner would be comfortable taking over at short notice, especially as this would be an added responsibility during a period of grief and when other practical tasks of some complexity may need attention.

So, what would you want to happen to your portfolio management if you are still in charge when you die, or if you lose your mental capacity, which could be a slow and let’s face it, hard to accept or even recognise process?

Can we (I count myself in on this problem, naturally) do something now to prepare and make the situation easier for our loved ones? 

Most of my subscribers are couples and one partner (male or female) is ‘running the money’.  A small number of you are single, but there is still a problem that has to be resolved by someone else when you depart the scene.  Older age may imply that the problem will arise sooner rather than later, but experience has shown me that even the relatively young can be hit by serious or even fatal health issues.

I believe we ought to at least do some logical thinking about this real issue and this article is an attempt to get you started.  As always, I am happy to respond to feedback and suggestions and pass on good ideas and advice anonymously.

[Read more…] about Deep Dive – May 2024

Filed Under: Members Only, Monthly commentary, Portfolios

YAP – there’s gold in them thar central banks!

15th April 2024 by Mark Potter Leave a Comment

You may have noticed a really significant increase in the price of gold bullion in recent months.

This is because something that we have known about for some time – continuous topping up of gold reserves by the Chinese central bank – is now seen as part of a more global pattern. With such large buyers active in the market, the price is bound to be well supported.

The reason for this anticipated expansion of central bank buying? Probably 2 main reasons, I think.

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Filed Under: Asset Allocation, Markets, Members Only, Portfolios

Deep Dive – April 2024

2nd April 2024 by Mark Potter Leave a Comment

To kick off this new series of articles, I am going to express some opinions that are not rooted in traditional book learning or any specific academic research or publications, but my own observations of what actually happens in equity markets, taken over the last 4 decades and mixed in with my personal rather eclectic reading about human behaviour in the context of decision making – not specifically related to financial decisions.

You might call this ‘behavioural insights in equity market valuations’ but I suspect that is rather too grandiose!

NotHarry says….

The main points

I will be exploring 4 less obvious ways in which market valuations are created and sustained (or not):

  • Possible ‘invisible’ supply side variations and/or sudden excess demand
  • The ‘the majority view is safest’ syndrome
  • The Government interference problem
  • The ice break risk

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Filed Under: Academic theory, Funds, Monthly commentary, Opinion, Portfolios

The Magnificent 7 ride again – but how many sequels can we expect?

21st February 2024 by Mark Potter Leave a Comment

The table which will download if you click the link below demonstrates well how shares in the mega sized tech firms (branded the Magnificent 7 after possible acronyms got to be absurd and named in the downloaded document) have generated most of the main US market returns in 2023, and for those of us with funds that have a specific thematic bias, some excellent results too.

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Filed Under: Markets, Members Only, Monthly commentary, Portfolios

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