I was really thinking of a bear market that lasted a decade or more (US post-1929; Japan post-1990, etc.).For my February paper, I tested it for the US and UK markets for the 32 years from 1986 to 2017 inclusive (that was the longest I had monthly data for).
You would certainly expect the fixed-income element to be a drag on performance over the long-term. However, there have been periods of 30 years or more in all developed economies where domestic long-term bonds outperformed domestic stocks.Having a modest fixed income element would make it even smoother, but at a cost of lower return...
I dont want to rub salt in the wounds but I saw Renishaw had another big fall today, i dont know what the reason is but I was interested in your post and your honesty in talking about your investments. On a positive note you have been investing in this share since 1998 and should still be in substantial profits. Maybe the reason why you have not sold much of your holding is that you would crystallize a large capital gain and have to pay alot of capital gains tax. You have not really discussed this aspect of the investment. Maybe if you were resident in the UK where they have a very generous capital gains tax allowance of around £11,000 you might have been selling off more of your investment and re investing somewhere else. Maybe i am not correct in my assumption but I think the onerous capital gains tax situation in Ireland has stopped people from selling off investments with big capital gains, this partly explained why many irish investors did not sell their bank shares in 2008 when trouble hit. I know you are far more sophisticated than most people investing in irelandRenishaw, a specialist engineering company with its headquarters in Gloucestershire, is my longest-standing and largest single holding. I bought my first shares in the company in 1998, at £4.05 a share. It’s my one and only “ten-bagger”, defined as a share worth ten times what was paid for it originally. It now accounts for more than 25% of my total portfolio.
Results for the year to 30 June were published on 26 July. The market liked what it heard and the share price, which had been rising steadily for weeks, reached a closing high of £56.60 the following day. I took advantage of the price rise and sold just over 10% of my holding at an average of £56.20 a share.
Then the price started falling. I wasn’t worried as I still considered it a sound investment. In fact, when the price fell, I couldn’t resist the temptation and bought back around a third of what I’d sold, at an average price of £51.13 a share.
Then, for no apparent reason, the price kept falling. It was down to £47.40 by the end of September and there was no respite as we moved into October. By 5th October it was at £45.56 and by Thursday last (11th) it had dipped below £40 a share - a fall of almost 30% from the July high. No wonder I was left reeling. On its own, the fall in Renishaw’s share price caused a 7.5% fall in the value of my total portfolio in just two months.
Small engineering companies are ten a penny, often badly managed, everything with them is price, the competition is fierce.the (woefully artificial) assumption that earnings grow steadily at 9% pa. In practice, of course, earnings growth will be volatile around the long-term average, as will the PE ratio, but I can only deal with one uncertainty at a time!
Small engineering companies may indeed be ten a penny, but companies (in any sector) with the mindset I've described are extremely rare and should be cherished. If you know of any others that meet the criteria I've described, I would be delighted to hear from you (you can send me a private message on AAM).Small engineering companies are ten a penny
Sorry for your troubles colm, you never get used to losses no matter how much experience you have. I think most people are down significantly in the last few months anyway. For what its worth my worst period was late 2015, early 2016 due to the investments I had then but it recovered fairly quickly in 2016. I actually did not get hit too badly in 2008, but 2015/16 was my worst period in investing. Although if Brexit goes badly I could be hit fairly hard again but then that is the time to continue to load up on UK stocks which are the best value they have been in a long time.It’s been a traumatic few months for my portfolio. Its value fell by 15.8% in October, making it the worst monthly result ever, or at least the worst since I started keeping detailed monthly records from the start of 2013. October’s fall came on the back of an 8% fall in September and was followed by a further 2% fall in November. Do the math. I’m a lot poorer now than I was a few short months ago.
The sums don't tell the full story though. Here's a hypothetical scenario: suppose your portfolio returns for the next five years are -20% in 2019, -25% in 2020, -10% in 2021, -3% in 2022, +1% in 2023 and +0.8% in 2024.The heavy losses I suffered over the last few months caused me briefly to consider giving up on my strategy of investing 100% (or more) in growth stocks, and of pursuing a more conventional strategy, as recommended by the experts for someone of my advancing years. Then I did some sums and discovered that my strategy is delivering exactly what it says on the tin: significantly higher volatility but much higher returns than a more conventional mixed portfolio.
How can you call it a bolt from the blue though? That's the ninth time this year that this stock has spiked after a large drop. In fact that's been its consistent pattern for the last five years.I had a similar lucky escape with Tesla. As discussed in Update 2 (1 April), I opened a short position in Tesla earlier in the year, i.e. I gambled on the share price falling [..] Then came a bolt from the blue.
Hi Joe. I agree, but the message I would like to get across is that high volatility, including the occasional experience such as I've had over the last few months, is a small price to pay for significantly higher long-term returns than can be earned from bonds or cash. Even after my recent disasters, I've still earned over 10% a year for the last six years compared to around 2% or so if I'd been in so-called "safe" investments. I am reasonably confident that the same will be true in future - and I hope to be around for another decade or two.you never get used to losses no matter how much experience you have.
The bolt from the blue was the unexpected profit, not the price hike. To quote from the FT of the following day (recognising the FT's copyright, etc.):How can you call it a bolt from the blue though?