So it’s finally happened.
Let me phrase that.
So something has finally happened.
Since beginning my portfolio in August of 2015, returns have been largely stable and definitely favourable. I always bang on about letting your portfolio do its thing and not checking it every five minutes, which to be honest has been easy for me so far. A nice, relatively linear upward line in my portfolio value since it began has certainly helped me sleep at night.
2018 has started a little differently.
Before I start, an update to say that I withdrew approximately 14% of the year-end closing value of the portfolio. This wasn’t my intention when setting it up, however needs must, unfortunately. I have therefore had to re-set my opening 2018 value to be able to adequately track performance throughout the year.
Now, leading on from this is an impromptu portfolio update. Year-to-date I am down approximately -4.62%, against my benchmark, the FTSE All-Share, which is down -4.91%. Nearly two months in and I’m barely beating my benchmark.
I don’t really care. I’m choosing not to worry.
Short-termism is a killer. I saw a lot of trading activity on Twitter this past month, and an awful lot of talk about markets, prices, profits and losses. It appears that whenever markets get a little choppy, people feel they need to do more. I’d argue they need to do less. I sold Plus 500 (LSE: PLUS) recently, but other than that I’ve been letting things tick over as normal.
Ultimately, I am comforted by two things. One, UK markets appear (at least to me) fairly valued at worst. Secondly, My purchases have been at favourable valuations. I err towards growth & quality, but I try to do so at a reasonable price. There are no BooHoo’s at 90 times earnings in there. I feel this gives some element of protection against adverse market conditions.
To look at the FTSE 250, the past three months don’t look good:
Since peaking at 20,932 on January 5th, the index has fallen approximately 5.4%. There’s been a little recovery since the low of 9th February, but at that point many were asking whether this was the long-awaited ‘correction’. The question begins to rear its ugly head. “Should I sell now, and preserve my gains?”.
Nobody Ever Lost Money Taking Profits
The determination to retain my holdings is something I’ve had to develop over time. One of the biggest things that has helped me is my understanding that I cannot time the market, and shouldn’t even try. (Ironically I’ve just started reading a book called ‘Yes, You Can Time The Market’).
Who knows where we go from here. Was it a quick 5% blip on the radar, or are we seeing the beginnings of a major market correction/fall? Who knows. Correction. Nobody knows.
But let’s look at a one year time frame:
At the low on the 9th we’d given up around 7 months of gains. Not pleasant, for sure. But not the end of the world for someone holding long-term. In fact, it presented quite a nice opportunity for those with cash.
But look at the total history of the FTSE 250:
And My Point?
If you’re investing for the long-term, think long-term. If you’re selecting equities to hold long-term, hold them for the long-term. Don’t change your rationale, or your mindset, if markets get a bit choppy. If you’ve built a portfolio full of quality companies, don’t hamper their progress by constantly interfering with your holdings.
That’s my opinion. Do your own research.
Leave a comment below, or find me on Twitter @BritishInvestor.