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Mistimed Fund Switches
Posted: 28 December 2017 13:26:13(UTC)

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I tend to stick to what I've got unless something is really awful over a year or so but I've tried to be a bit more proactive recently and thus far have every one wrong.

I panicked when Fidelity China Special Sits recently took a dive - I'd been with it from launch and that was a roller coaster back then. Of course it's recovered and more since then.

More recently I switched my Marlborough Multi Cap income which was doing so so to an old favourite of mine, Stewart Investors Asia Pacific Leaders. My original investment would have been 6% up on the new one.

For a long while I've held Blackrock Gold & General and Neptune Russia & Greater Russia and for most of this year I'd promised to do something about them if they didn't raise their game so I've just sold and gone back to the Fidelity China Special Sits. Each of the sold funds is doing better than FCSS.

I recommended a safe fund for my wife a month or so back and that's down too.

I think I'll just pin the funds list on a wall and throw a dart at them.

Have I just been unlucky or is this a shared misfortune?

2 users thanked AnthonyL for this post.
Mickey on 28/12/2017(UTC), Tim D on 28/12/2017(UTC)
Posted: 28 December 2017 13:32:13(UTC)

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A tad unlucky I would think. When I switch anything I am often more critical of performance with the new stuff, you may perhaps just be looking too hard and need to give them time.
Posted: 28 December 2017 13:38:07(UTC)

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We all get things wrong from time to time.
You have been unlucky...Don't let it get you down
I follow the Buffett / Smith line of doing 3 things which seems to mostly work ok:

- Buy the right company
- Pay the right price
- Do nothing

The last thing can be the most difficult but many times of have seen a investment sink only to recover cos I got the first two things right
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Captain Slugwash on 28/12/2017(UTC), Dian on 07/01/2018(UTC)
King Lodos
Posted: 28 December 2017 14:09:27(UTC)

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The market is a game, and a huge number of participants are trying to time points of maximum fear and greed .. If you're not one step ahead of that game, the market's going to feel like it's constantly working against you.

The point of maximum pain is usually where you sell – but it's very often the point markets turn .. Likewise, I got so used to opening a position and then it going down immediately, I learnt to start with small positions.

I got hit on FCSS (only with fun money), but it unnerved me because I'd not really screwed up a trade in a while, and overconfidence is what gets you .. Basically, if you want to trade on momentum, you need to be moving before the market – so you need to be looking for signs of weakening trends, and move within a few weeks at most .. Longer than that and mean reversion starts to take over .. But really no one needs to worry about this stuff – it's worked out for me for a while, but I hope I'll have the sense to stop as soon as it stops working

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andy on 29/12/2017(UTC)
Sara G
Posted: 28 December 2017 14:17:23(UTC)

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I think selling Blackrock Gold and General and Neptune Russia to go back into FCSS may turn out to be a very wise move - you just need to give it time.

BRGG has had a pretty good run of late and it is obviously tied to the gold price so it's a fund I tend to buy and sell quite frequently - a sector to 'rent rather than own' as some have said, including on here (King Lodos?). As for Russia, views are polarised - it's either dirt cheap or cheap for a reason. But Asia is a growth story for the long term.

Selling the Marlborough Income fund to buying the Stewart fund is also smart if you are pessimistic about the UK market.

If you're concerned that you're switching too much, you could consider sticking with your current choices for a year, say, and topping up via regular savings so that you're not making any active decisions for a while?
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King Lodos on 28/12/2017(UTC), andy on 29/12/2017(UTC)
King Lodos
Posted: 28 December 2017 14:39:53(UTC)

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Sara G;54650 wrote:
BRGG has had a pretty good run of late and it is obviously tied to the gold price so it's a fund I tend to buy and sell quite frequently - a sector to 'rent rather than own' as some have said, including on here (King Lodos?). As for Russia, views are polarised - it's either dirt cheap or cheap for a reason. But Asia is a growth story for the long term.

I do use that one.

I think I've got a very 'rental' attitude towards stocks in general – but perhaps just because there isn't really anything that looks cheap.

With the exception of Russia .. I can understand fund managers not wanting to get involved (as a market that's effectively gone to zero before), but being able to buy big companies on 5x earnings is at least a form of diversification .. I'm terrible at timing Russia, but just having some exposure has me up maybe 40% over 18 months
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Sara G on 28/12/2017(UTC), andy on 29/12/2017(UTC)
Tim D
Posted: 28 December 2017 14:54:51(UTC)

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Heh; this sort of thing is why I have a rule that if I buy something... I'm sticking with it for 5 years minimum. So far it's served me well over 3 decades of accumulation; I'm sure I'd be tempted to fiddle about with the portfolio far too much without it. I'm also kind of the opinion that if you're not prepared to commit to an investment for 5 years from the point you invest in it... you probably shouldn't be buying it in the first place (unless you're a self-confessed "trader" of course, in which case anything goes). In 3 decades of investing the only exceptions I've made have been partly rolling back a tactical GBP-to-USD cash move made pre-Brexit (by far the single most tradery thing I've ever done), following a couple of managers who moved to other funds, and a few forced sales from takeovers/fund closures.

I suppose you could say I've got a very "HODL" attitude towards stocks :^)
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AJW on 29/12/2017(UTC), Dian on 07/01/2018(UTC)
North Star
Posted: 28 December 2017 16:26:09(UTC)

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I'm not convinced about staying with a particular fund if its not performing to expectations or on par with other similar funds. I prefer IT's but in the present market some of the best IT's look a bit pricey with excessive premiums. I'm not altogether convinced that managers 'manage' funds once they have been created. A new UT is often started leaving the old ones to plod along. IT's in my opinion are more actively managed as it's far costlier to start a new limited company.
I'm moving some SLA funds to BG to reduce costs and hopefully improve performance as BG look to be far better at some international markets. So far I have been looking at Global funds.
[img=,-prices--and--factsheets/search-results/b/baillie-gifford-international-b-accumulation/charts]Global Funds[/img]
Mr Helpful
Posted: 28 December 2017 18:57:17(UTC)

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When we buy a position, it is not in the expectation that the price will then immediately and forever rise.
If such a new position were to rise unduly and quickly become fully valued, then it would be necessary to sell/reduce and find something else apparently cheaper. That creates another problem.

In designing a portfolio, we try to :-
+ Determine the ratio of Risk v Defensives v Cash, dependant on overall market valuations.
+ Then top-down select individual regions/sectors, choosing any active positions on the team's long-term philosophy.
+ Lastly we allocate to chosen positions an amount based on perceived current valuations.

When any of the chosen positions are down or underperforming, we become more interested not less; and look to build that position. Not looking to switch horses because the initial choice seems to be underperforming others. And quite content to be underwater/lagging for years on end, as long as the reason for the investment remains intact. See KL comment about starting small and building gradually.
WARNING : This approach would not work for individual Stocks, but is fine for ETF Trackers and Investment Trusts, where stock-specific risk is avoided.

Above all IMHO investors need a written plan before starting their investment journey, which explains clearly how they will add on price weakness and reduce on strength. Anything else is gambling, albeit with the tables heavily tilted in the investor's favour, as in the long-term Stock prices tend to rise. This last can be a mixed blessing for a beginner, who may then think they have discovered the Midas touch !!!

Hopefully this ramble is pertinent?
It may well not be !!!
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Tim D on 28/12/2017(UTC), Sara G on 28/12/2017(UTC), North Star on 28/12/2017(UTC), andy on 02/01/2018(UTC), Dian on 07/01/2018(UTC)
Posted: 29 December 2017 12:54:58(UTC)

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>> KL / Sara

Following comments about Russia - I just view that market as uninvestable as you cant price anything when it can go so quickly to zero because of a change in government. In similar camps are much of Africa and South American as far as I am concerned. Trade it, gamble it - but I cant see it as an investment.

>> Original Thread

In terms of the original poster - yes - I suspect most of us have done it.

As a thought - you might want to split your pot into two - investing and trading - that might help with discipline that you simply buy and hold the investment part and get to "play" with the other part. I do that as I have done a lot of "renting" in the past. I did notice though that yesterday I did more trades than the rest of the year combined in the six monthly rebalance. Maybe says something about now having a plan and/or the state of the market.

Wishing all contributors a Happy New Year - and be careful what you wish for!

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Sara G on 29/12/2017(UTC)
Sara G
Posted: 29 December 2017 13:32:34(UTC)

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Andy, I agree on Russia... I'm not sure the principle of mean reversion applies given the political context, and I wonder where the growth is coming from when it is still so reliant on resources...I bought BEEP this year on the basis that the high Russia exposure is balanced by a broader regional exposure, but Turkey is starting to cause me sleepless nights so I may switch to an ETF tracking the rest of Eastern Europe, or just Poland, where I think the prospects look better.

I disagree on Latin America and have about a 6% exposure to the region mainly via BRLA. A recent article in Moneyweek highlighted that the recent problems in Venezuela may be having a positive impact elsewhere by showing how not to run an economy.

Africa is a very long term growth story of course, but worth having a small amount of exposure perhaps via a frontier markets fund? I sold BRFI recently when it went to an 11% premium, but will keep it on my watchlist.
Mr Helpful
Posted: 29 December 2017 14:52:15(UTC)

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See JRS (Russia) tipped today in IC, as a buy!!!

We first bought into JRS MY14 @ 396
top sliced a little JU14 @ 474
continued buying into a trough down to SE15 @ 293
then top-slicing up to JA17 @ 549
since then mixed bottom-filling and top-slicing

JRS is for us a good example of a longer-term holding approach (albeit in this case not so very long).
Not needing any foresight or particular conviction about the future, just ensuring adequate geographical cover in the portfolio and then taking advantage of the switchback ride, to gradually reduce book-cost.

Today ; in valuation terms see upside potential and downside risk for JRS equally balanced, with momentum (for the chasers) also inconclusive.
Our holding is a part-weighting only. Should we ever see 293 again might reconsider the weighting !!!
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MoMoney on 29/12/2017(UTC)
King Lodos
Posted: 29 December 2017 15:09:47(UTC)

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I think of Russia as part of my Jim Rogers portfolio .. He'll invest in the cheapest things in the world and just ignore them – he's trying to invest in N.Korea too .. When you look at Emerging Europe valuations, you've got PE 8.8, growth 14% .. So that's basically a bond paying 11.5%, with the potential to grow 14% a year .. I also think the media's doing a great job of keeping fear around Russia higher than it deserves to be:

Year on year returns will be dictated by mood, but I think so long as nothing derails it, it's basically upwards corrections you're waiting for .. That aside, I have cut back on EM and Russia – and Small-caps and PE .. I think my desert island portfolio would basically be consumer stocks and amazon warehouses

3 users thanked King Lodos for this post.
Slacker on 29/12/2017(UTC), Keith Hilton on 29/12/2017(UTC), MoMoney on 29/12/2017(UTC)
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