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Buzzfolio - 2016 (or how bad I am at share picking)

Honest reporting on shorter-term trading activity and ideas
buzzzard000
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Buzzfolio - 2016 (or how bad I am at share picking)

#1881

Postby buzzzard000 » November 7th, 2016, 7:51 pm

OK, I've been a long time lurker on TMF and only posted a few times with a couple of folio posts.

I've been meaning to update for a while, and with TMF going bye bye, I think it's time i did:

The short version is that I'm rubbish at share selection, and I should stick to trackers. I am now 100% passive, and so much happier for it. This review is based on a retrospective analysis of my investment history over the last 6 years (with some approximations for 2000 to 2011).

I have relied on the stepone portfolio excell spreadsheet created by itsallaguess and kiloran for analysing my portfolio and doing the number crunching. I highly recommend it to anyone with more than 1 share / fund: http://tmffinancialsoftware.weebly.com/ ... folio.html

My previous folio reviews can be found here: http://boards.fool.co.uk/self-indulgent ... 37705.aspx and http://boards.fool.co.uk/buzzz-folio-2011-12453162.aspx


Overview

  • I started off with a 50% 50 split between the FTSE 100 and FTSE 250 drip feeding from 2003 to ~2014. The index trackers were based on early reading on the fool uk website.
  • In 2009 I started buying individual shares, and dabbled in a couple of active funds (recommended by Hargreaves Lansdown).
  • In 2010 I looked at a little geographic diversity and took some regional index funds.
  • overtime, I realised that my funds did much better than my share selection. So I started to sell off in a couple of tranches (partially when I moved ISA providers).
  • In 2016, I discovered the monevator blog and read Smarter Investing by Tim Hale.
  • Since then, I have gone 100% passive.

Funds
Overall my funds have been very successful, with an average return of 12% compounded. All but three funds were passive indexes. Of the three active funds, two made a profit, but the Junior oil fund purchased in January 2011 made a 43% loss over 42 months.

I have had a very strong focus on the FTSE 100 / All share / 250 with about 85% of all my funds in these. OVertime, it has been more heavily weighted to the 250 as I found it to be consistently better performing than the 100.

Note, the annualised calculations are probably distorted for many of the funds as purchases were drip fed, particularly the FTSE 100 / All Share and 250. I also jumped between difference geographic funds as I chased lower fees. Even so, it's clear that investing in funds have been good to me.

Code: Select all

Fund                   | Purchase  | Sale      | Period  | % profit | % profit
                       | Date      | Date      | (years) | total    | comp   
HSBC 250               | 18 Nov 03 | 4 Aug 14  |    10.7 |     261% |      11%
HSBC All               | 18 Nov 03 | 4 Aug 14  |    10.7 |     219% |      10%
Investco active  Bond  | 9 Mar 09  | 31 Jul 14 |     5.4 |      71% |      10%
Artemus active Strat   | 21 May 09 | 31 Jul 14 |     5.2 |      59% |       9%
L & G Pacific tracker  | 23 May 10 | 6 Jan 11  |     0.6 |      24% |      29%
L & G Japan tracker    | 24 May 10 | 6 Jan 11  |     0.6 |       6% |       9%
HSBC USA tracker       | 24 May 10 | 23 Jan 12 |     1.7 |      15% |       8%
HSBC European trac     | 24 May 10 | 23 Jan 12 |     1.7 |       4% |       3%
HSBC pacific tracker   | 6 Jan 11  | 31 Jan 12 |     1.1 |      -9% |      -9%
HSBC Japanese trac     | 6 Jan 11  | 23 Jan 12 |     1.0 |     -12% |     -12%
Junior oils fund       | 7 Jan 11  | 1 Aug 14  |     3.6 |     -43% |     -17%
Blackrock US tracker   | 2 Feb 12  | 1 Aug 14  |     2.5 |      41% |      13%
Blackrock European     | 2 Feb 12  | 1 Aug 14  |     2.5 |      37% |      12%
Blackrock Pacific trac | 2 Feb 12  | 1 Aug 14  |     2.5 |      16% |       6%
Blackrock  Japan trac  | 3 Feb 12  | 1 Aug 14  |     2.5 |      23% |       8%
HSBC FTSE 250 Index    | 29 Jul 14 | 27 Sep 16 |     2.2 |      18% |       7%
HSBC FTSE 250 Index    | 5 Aug 14  | 27 Sep 16 |     2.1 |      18% |       7%
HSBC FTSE 100          | 5 Aug 14  | 27 Sep 16 |     2.1 |       8% |       4%
Vanguard US index      | 10 Feb 15 | 26 Sep 16 |     1.6 |      26% |      13%
                       |           | Average   |     3.2 |      49% |      12%


Share save
I acquired a significant number of shares in Johnson Matthey as part of an employee share save schemed. When I left the company, and they bacame available to sell, I top sliced some, and invested in FTSE trackers to reduce my exposure to a single company. I then held the rest until 2016. These have been very good to me and have more than doubled in face value and returned something like 14% year on year.


Shares
Following my review of my actively purchased shared (everything except JMAT), I think I have identified a few common trends:

  • Incomplete research into individual shares.
  • Too many purchases based on internet posts.
  • Failure to keep records of my reasoning to purchase.
  • Failure to keep track of my shares.
  • Purchasing too many individual shares.
  • Failure to sell when the circumstances changed.
  • A tendency to follow the crowd (lots of small oil in 201).

Overall, my active share portfolio lost 14% of the invested value. Thankfully, my profits from my more passive investments made a much larger profit (granted that these were over longer / different time periods) JMAT made ~3x the value of the other shares losses, and the Funds made >10x more profit.

For the sake of completeness, here is my list of shame:

Code: Select all

Share           | Purchase   | Sale       | Period  | % profit | % profit
                | Date       | Date       | (years) | total    | comp   
Parkmead        | 08/11/2010 | 30/12/2010 |     0.1 |     228% |     100%
Coastal         | 01/03/2013 | 27/01/2014 |     0.9 |     125% |      59%
Premier oil     | 19/01/2012 | 31/07/2014 |     2.5 |     248% |      39%
Quintian        | 21/02/2011 | 15/10/15   |     4.6 |     216% |      22%
Barclays        | 28/01/09   | 24/01/12   |     3.0 |     135% |      25%
Jmat            | 01/01/2011 | 28/09/2016 |     5.7 |   138.1% |      14%
Berkshire Hath  | 06/02/2015 | 26/09/16   |     1.6 |      10% |       6%
Indegovision    | 11/01/2011 | 31/07/2014 |     3.6 |      18% |       5%
Parkmead        | 27/06/2012 | 03/07/2014 |     2.0 |       9% |       4%
Aviva           | 21/01/11   | 29/09/16   |     5.7 |      21% |       3%
Statoil         | 24/01/2012 | 30/07/2014 |     2.5 |       1% |       0%
BP              | 09/06/2010 | 26/09/16   |     6.3 |      -1% |       0%
Encore          | 29/03/2011 | 19/01/2012 |     0.8 |      -2% |      -3%
Dominion        | 29/03/2011 | 01/12/2011 |     0.7 |      -2% |      -4%
Soco            | 04/11/2010 | 26/09/19   |     8.9 |     -46% |      -7%
Arian silver    | 21/02/11   | 03/07/14   |     3.4 |     -22% |      -7%
Bank of Ireland | 11/03/11   | 03/07/14   |     3.3 |     -31% |     -12%
BG              | 27/03/12   | 31/07/14   |     2.3 |     -23% |     -12%
Tesco           | 24/01/2012 | 26/09/16   |     4.7 |     -47% |     -15%
OPHIR           | 01/12/2011 | 31/07/2014 |     2.7 |     -38% |     -19%
Salamader       | 29/03/2011 | 03/07/2014 |     3.3 |     -55% |     -28%
Lenovo          | 28/07/2014 | 26/09/16   |     2.2 |     -40% |     -26%
Tullow          | 27/03/2012 | 03/07/2014 |     2.3 |     -46% |     -31%
Morphosys       | 28/07/2014 | 26/09/16   |     2.2 |     -47% |     -35%
sound           | 07/01/2013 | 03/07/2014 |     1.5 |     -33% |     -30%
Falkland        | 24/01/2012 | 30/07/2014 |     2.5 |     -56% |     -38%
Rockhopper      | 11/01/2011 | 03/07/2014 |     3.5 |     -77% |     -53%
Europa          | 14/01/2011 | 03/07/2014 |     3.5 |     -77% |     -53%
Gulf Keystone   | 23/01/2012 | 31/07/2014 |     2.5 |     -59% |     -43%
Xcite           | 14/01/2011 | 03/07/2014 |     3.5 |     -83% |     -67%
Sterling resour | 10/01/2011 | 03/07/2014 |     3.5 |     -86% |     -77%
Santander       | 14/01/2011 | 23/01/2012 |     1.0 |     -27% |     -35%
Bowleven        | 28/02/2011 | 03/07/2014 |     3.3 |     -88% |     -91%
Vatukuola       | 28/01/2011 | 01/08/2014 |     3.5 |    -100% |         
Aminex          | 14/01/11   | 01/08/13   |     2.5 |     -90% |    -151%
Deo petrol      | 07/03/2011 | 27/06/2012 |     1.3 |     -57% |     -90%
Hiwave          | 11/01/2011 | 19/04/2013 |     2.3 |    -100% |         


Looking at the list, It's obvious that I jumped on the oil bandwagon at a bad time. And while, I was happy to hold long term / stick my head in the sand and wait for a recover. Bankruptcies / takeovers forced my hand on a number of occasions.

Of my active shares, a few did come up good. But looking at the data, I can only claim luck and not judgement. I did the majority or my purchasing in 2011 and 2012. On average these lost 24% before they were sold, while the FTSE 250 (my index of choice at the time) went up 50% between Jan 2011 and Dec 2013 without dividends.

My conclusion is quite simply, that I don't have the temperament for active share purchasing. Therefore, I have a new strategy that is 100% passive with occasion re balancing.

That will be a separate post.

I'm not sure there is any point to this post, other than to illustrate how poor share selection compares to a bunch of trackers and to remind me of what I have decided to go 100% passive, but any comments or questions would be welcomed.

Regards

Buzz

andyalan10
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Re: Buzzfolio - 2016 (or how bad I am at share picking)

#1996

Postby andyalan10 » November 8th, 2016, 12:49 am

Nice tables, I'm very impressed.

Well done on recognising that you seem unable to pick shares. I know just how far my individual shares are behind the market overall, which is why the bulk of my pension savings are in UK or global trackers. I tell myself that once I get my individual share picks to a position where they are outperforming the market then I'll allow myself to more actively manage my other investments. But realistically I know it may never happen.

I love the idea of "Trading my way to a million" and of course individual shares should make that way easier than investing in trackers, as the variance in their performance is so much greater. After all I bought RDSB (Shell) earlier this year at £13 and it now stands at over £21. All I need to do is repeat that a few times, and not make any mistakes and we could acheive the goal.

My next piece of analysis should be to see if shares I have bought more recently are performing better than ones that I bought longer ago, I might just have a look at that right now.

Andy

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Re: Buzzfolio - 2016 (or how bad I am at share picking)

#5997

Postby masmon » November 17th, 2016, 4:23 pm

I admire your honesty in reporting your losses with your share picking. Seldom to hear people talk of their losers, most often we tend to hear about the winners.

I have made some awful investment decisions in the past that I still beat myself up over on occasion - learnt lots of lessons along they way though .. nowadays am a lot more careful and only invest in things I fully understand. Oh and keeping a healthy level of cash lets me sleep better to.
I also discovered that investing in a rental property was (surprisingly) less stressful as there is not the same tendency to know what your asset is worth - whereas with other investments there is that nasty temptation to look at the brokerage account far more often than could be considered beneficial..

AdamB
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Re: Buzzfolio - 2016 (or how bad I am at share picking)

#6997

Postby AdamB » November 20th, 2016, 1:26 pm

Definitely a lot of credit to the poster for honestly and ability to recognise potential weakness (currently). I would always advice a new investor to dabble with a virtual portfolio for at least a couple years before commiting hard cash, however that's very easy to say and very hard to do.

I was (kind of) lucky in that when I started investing, I didnt have the amount of capital available which would be considered material relative to that which I had 5,10,15 years later so my mistakes / education period weren't as costly. As with anything, it takes time to improve but its worth persevering with. You just need to find an approach which you're comfortable with and which suits your personality, knowledge, available time and circumstances and then stick to that. If that is always going to be passive investing then so be it

Pipsmum
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Re: Buzzfolio - 2016 (or how bad I am at share picking)

#52012

Postby Pipsmum » May 8th, 2017, 12:44 pm

Thank you for the frank advice.

It is so easy to be an over eager investor because it is a more exciting thing than static forms of investing. Having been a stoozer for years, I find the whole thing highly entertaining with some areas having wonderful uber complex maths. Some of which are way beyond my capabilities (as yet).

As a complete newb, I've mostly resisted own choice shares, but have already been led into small investment temptation by a few good reports in some of the ways described above. Overall I have stuck to managed funds and will certainly heed this sage post before getting tempted to ski too far off piste.

The ones that have lured me in are
Sirius
Hurricane
Kier
Phoenix
and Boohoo

We'll just see....


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