Having explored the idea of a quality company in my previous article, I wanted to follow up with an important caveat: price matters and my own approach is now more focussed on investing quality at a reasonable price than simply buying cheap companies. Without working to determine a fair valuation for an asset, an investor runs the risk of the age old saying “any investment is a bad investment at the wrong price”. In this article, I’m going to explore this saying in more detail and unpack the different valuation methods for buying quality at a reasonable price. If the first goal of a solid inve ..read more

“In the short-term the stock market is a voting machine but in the long-term it is a weighing machine.” Warren Buffett To some degree, I have always cared about ensuring that my approach is focused on investing in quality companies and have therefore used quality as a driver for what to buy and sell. Over the last few years, I have become increasingly convinced that earnings per share are a significant driver of investing returns, and so have worked to concentrate my portfolio into those businesses with the greatest growth in EPS whilst divesting myself of the opposite. Having said this, when ..read more

A few weeks ago, I was speaking to a newer investor who had listened to an episode of the podcast and had heard me talking about being “down 40, 50, 60%” on an investment. As someone that hadn’t been investing long, this had concerned them, and they wrote in to ask if I could clarify how I could justify losing capital like this when I spoke about financial responsibility so much. “I work hard for my money and I haven’t got a lot of capital to invest. When I was growing up, my parents always told me that investing was just gambling and that I should never do it. Now I’m older and understand the ..read more

Having started investing over ten years ago, I can now say with reasonable confidence that success takes hard work. Grande Sorpresa. After losing 11% in 2022, I have just managed to squeak out a fantastic 0% return. Yes, that\’s right, after a whole year of hard work, I\’ve managed to go precisely nowhere (compliments can be sent to the Participation Award Office, London). This takes my compound annual growth rate (long-term return) at a pedestrian 7.3% a year since 2015. 2023 in Review During another difficult year, I had as many losing months as profitable ones, with my best month being Dece ..read more

Earlier this week, a reader contacted me on social media with a question about the repayment of debt compared to paying or maintaining a dividend. Although I initially answered privately, I wanted to take the opportunity to write a longer response which is better suited to an article. “Companies like Vodafone and Halfords which have large debts still continue to pay a dividend, do you think that\’s the right strategy? Surely stopping the dividend and paying down the debt is more sensible with interest rates high? What are the arguments for and against?” What are dividends When a company takes ..read more

In 2007, one of the world’s biggest investment banks, Lehman Brothers, collapsed into bankruptcy after suffering months of share price declines amid rumours of its subprime mortgage exposure. For those readers of a more tender age, the investment banking system had basically loaned funds to property investors that were fundamentally incapable of keeping up with repayments. The basic premise of a mortgage is that the bank lends a borrower the majority of the capital required to purchase a property upfront, to be repaid in instalments over 10-35 years. Most mortgage lenders offer attractive ‘int ..read more

Every investor knows the saying that investments can go down as well as up in value. Knowing and seeing this in action are two different things however, and my perception over the last 24 months has been of a huge number of investors disappearing from social media. After a decade of low interest rates and loose fiscal policy, many retail investors have become addicted to asset inflation. With more money in the system and borrowing being cheap, investing in the majority of assets has simply been a case of ‘buy and hold’, with even non-existent ‘art’ in the form of Non-Fungible Tokens (NFTs) bei ..read more

Let’s start with the nasty bit – year to date, my portfolio is down 7%. Yes, that’s right, after losing 11% in 2022, my portfolio is already down another 7% in the first six months of 2023. So, take a deep breath, top up the coffee, and let’s see how I’ve managed to lose another 7% of my portfolio. If we rewind to January, my portfolio was less concentrated than previous years, but had a weighting towards REITs and collective investment vehicles. For many years, I have been accumulating dividend-paying investments, reinvesting the dividends, and as such, REITs and collective investments were a ..read more

During the course of publishing this blog, I have previously written two articles about my portfolio review process, the first providing a general insight into my review process and the second providing a more detailed description of my half-year reviews. In today’s article, I’m going to provide more detailed about my quarterly portfolio review process, specifically, the metrics I review and decisions I make based on these. In the original article, I provided a brief overview of the four types of monitoring I undertake; daily, monthly, half-yearly, and annual. The basic premise of this program ..read more

Ask most private investors about their opinion of investing in small companies and they will happily tell you that ‘investing in small caps exposes investors to an information mismatch which enables outperformance’. The idea is a simple one. Big funds with professional analysts have too much capital to deploy to worry about investing in companies worth less than £100m, and as such generally overlook this segment of the market. This creates an opportunity for private investors with smaller portfolios who can take advantage of the price and value mismatches that occur. The smaller the company, t ..read more