How To Get Back On My Bike!

[Mercenary]

A new member here, only my second post!

Ok, forgive for I have sinned. It's been five years since I last looked after my investments. I have been preoccupied with other matters (no I have not been inside!) and have let my ISAs, SIPPS and trading accounts to their own devices. I have been between 30% and 50% invested with income focussed portfolios (one ETF based and the other individual share based). I used to be a competent investor and reasonably well versed in technicals, fundamentals, and the like.

Question is what do I do now? Clearly not to jump in and try to make up for lost time. But I'm worried about my cash balances viz the protection limits (I have a naturally bearish nature and I believe good reasons for being so going forward). Maybe dollar cost average a bit more into my existing income portfolios (after a tidy up), and maybe start looking at investment trusts aligned to my bearish outlook. Maybe there are safe harbour investments for some of the cash balances. I'm sufficiently well allocated to precious metals.

Naturally I'm not looking for investment advice but rather for meta type things to consider in formulating my re-engagement plan. I'm pleased to have resisted the urge to "dive in" but what next? I'm currently in an analysis phase in terms of my past investment performances, revised watch lists, and current markets and sectors. A balanced portfolio seems to be the way to go, but with a reduced bond allocation. I also need to plough through this site as I like what I have read so far (mainly the US ETF, KID, PRIIP saga). Any thoughts?

As an aside, one advantage of my current situation is having the chance to see how two buy and hold portfolios have done as I have not interfered in any way and just let them run. Not too bad actually (c.7% net annualised, as an income play). I just wish I had been more invested in the income portfolios and more active in the trading. Very little performance difference between the share only and ETF only portfolios and I was quite surprised by the diversification/portfolio effect I had from the share only portfolio (of some 15 shares), while some of the ETFs underperformed (e.g. IUKD containing the AA and the like). Some good lessons learnt there.

Thanks in advance.

[Steveam]

For most people on here a lot less interest in their portfolios would probably be a good thing. There’s something addictive about investing and a serious risk of activity damage. You’ve been preoccupied with other activities and the portfolios haven’t done too badly - learn a lesson from this. A bit of tidying and allocation and a large dose of masterly inactivity suits me pretty well and the portfolios are at all time highs (in line with the markets). I retired nearly 20 years ago and live off the portfolios and they seem to do better if I leave well enough alone (which I do by taking extended holidays).

Towards the end of the Motley Fool boards I had a period of weaning myself off the boards and doing more studying. As I write this I wonder why I’ve gone back to my addiction (some call it a hobby!)

Best wishes,

Steve

PS: Imagine the funeral tribute “he was a fine fellow and will be remembered for monitoring his portfolios twice daily”

[Mercenary]

Many thanks Steveam.

Yes, "leave well alone" is probably a lesson learnt when I look back. After all, I was seeking a more "fire and forget" type income portfolio and I guess that's basically what I got. I also had/have a trading account to exorcise any "play" demons.

I guess the issues are whether I should be taking the opportunity to change/tweak things before "business as usual" and what to do with the cash balances which I wish I had deployed a bit more. It's a bit like a skipping rope. I've stepped off and now need to synch up to get back in. Maybe all I need to do is to read places such as this and slowly get back into the flow. That is, the usual - put the hours in!

I also don't think I'm alone. Jim Puplava (US, Financial Sense) and guests occasionally mention clients coming to them who have been out the markets since 2007 and now wanting in in a big way. Some even wanting to get back in with Bitcoin! Others moving advisers because their current one is too safe and not hitting those large US market gains. My understanding is that the US run up has largely been ex-retail investor (e.g. share buy backs) and 90% of the retail flows have gone into bonds. Any change now smacks of a market topping action. Not keen on giving my money away! Hence my caution.

BTW, what first strikes me (and I like) about this forum is the quality of the writing and responses. I have one other but this one's a keeper for sure!

[scotia]

and have let my ISAs, SIPPS and trading accounts to their own devices

If your trading account(s) is outside a tax shelter, then it should be your first port of call. Check to see if you have built up a capital gains liability. If so, burn it off annually with your capital gains allowance. Check to see what dividend and interest it is accruing, and be aware of the new associated tax bands.
As for the ISA and SIPP - as others have mentioned - masterful inactivity can be a perfectly acceptable strategy

[swill453]

PS: Imagine the funeral tribute “he was a fine fellow and will be remembered for monitoring his portfolios twice daily”

Hmm, that's me (at least twice a day), but on the other hand I haven't bought or sold anything for nearly 4 years...

I sometimes wonder if it would have done equally well if I hadn't been monitoring it

Scott.

[RececaDron]

You mention being naturally bearish, mention technicals, trading accounts, precious metals, active trading "play" demons, Jim Puplava of Financial Sense, retail flows, market topping.

My summation of you as an investor would be someone who is somewhat of a danger to themselves:
- prone to meddling and second guessing markets
- under-invested over the long term due to an inherent pessimistic slant
- condemned to substantially lower long term returns as a result.

How old are you? What are you investing for? To retire early, or already retired?

In your shoes I would be looking to remove myself from the investment equation as much as possible. Accept that you're the main problem, not the solution. It will leave you with more time to enjoy things you've an aptitude for and will almost certainly generate better - possibly much better - long term returns. What's not to like about that?

To do this I would probably construct a portfolio consisting mainly (ie. having a core) of a few multi-asset funds. Think of things such as the very low cost HSBC Global Strategy Balanced Portfolio C, or perhaps Vanguard LifeStrategy 60, as the type of thing to consider. Tack a few other things around this, but only things you feel you can fire-and-forget without intervention for an absolute minimum of 10 years. No trading, no big market timing decisions, no "play" money. Serious long term planning only with an asset allocation you can stay with, which may include plenty of cash to provide the psychological comfort you need.

I would confine your meddling efforts to monitoring the portfolio's progress towards your goals, ensuring the portfolio is implemented in the cheapest possible manner (and that your cash is always deposited as keenly as possible), while evangelising to others how removing yourself from the equation was the best decision you ever made!

[tjh290633]

I think that your first action should be to take a good look at what you have. You worry about cash balances, and the best plan is to get them invested sharply.

The other concern for me would be your balance of portfolios. You don't say how many holdings you have, nor what sort of security, but as far as the HYP type of portfolio is concerned, it ought to be brought more into balance by adding to the lower weighted shares first, culling any which have stopped paying dividends or where the yield is now well below 2%, and then, if any are still overweight, trim them back a little. By overweight, I mean more than a certain level, either absolute of relative.

Under 20 shares, 10% ought to be the absolute limit for weight in the portfolio. Above that you can move to a weighting relative to the median or average weight share. Up to 30 shares, twice the median or average is suitable, and above 30 shares you could tighten the limit to 1.5 times the median/average, but that depends on the absolute size of your holdings. Usually I trim back by about 25% below the limit, but it depends on whether that gives you a sensible size of trade, say at least £1,000 or more. This leaves the holding in question room to appreciate more before being trimmed again if necessary.

You reinvest the funds released in the best share to improve your income, usually one which is still underweight.

As someone has said, getting as much as you can into an ISA can be done in two bites, before and after 5th April.

For ITs and Funds, sort out the balance to suit your own preferences.

TJH

[Mercenary]

Dear all

Just to close on this post by saying thank you for all your comments. It has been very helpful from an attitudinal perspective. I've been busy crunching numbers and getting up to date and am now ready to move forward. I really took on board the "someone who is somewhat of a danger to themselves" comment and shall print this off and put it in a prominent place!

Thank you.