2017 In Review – The British Investor
Chriss currently works full time in IT, as Network Manager in a large primary academy in Hampshire and is an avid reader of books on finance and investing; we caught up with him recently to see how he performed in 2017.
Another year, another all time high for UK markets, both the FTSE 100 (+ 12%) and the FTSE All-Share (+ 13%) ended at their highest point ever, with returns of 12% and 13% for the year, respectively; so let’s see how we fared and get the numbers out of the way.
My portfolio returned 42.72%, dividends included, and has turned in 65.28% since I began it in August 2015; I have said all along that so long as I am capable of beating the All-Share index (my benchmark) I will pick and choose my investments. I’m delighted therefore to say that I have beaten this benchmark again in 2017.
And I am determined to up my game in 2018; more analysis of companies, more reading of investment books, and more thoughts on markets & investment generally
2017 in Review
I didn’t engage in all that much activity this year. If you follow my writing at all you’re probably aware that I lean towards buying and holding, rather than trading in and out of positions. So what did I buy and sell in 2017?
I’m not kidding; I don’t do much at all!
I also topped up on Somero, Next (NXT) and Creightons (CRL); 32Red was taken over in April, and my Emerging Market Europe ETF was shut down in November.
Happily, only three of my holdings had a negative return this year; Howden Joinery (HWDN), Next and Dialog Semiconductor (FWB: DLG) (read about DLG here).
So, who’s blown the doors off, and who’s been a laggard?
Creightons PLC caused me more stress than any other this year; it was one of my best performing shares last year, and still returned over 100% this year as well, but, take a look at the share price movement in 2017:
It was significantly higher earlier in the year, before falling; at one point I was onto a five-bagger. Will it get back to this point? I think so, it’s a stellar company with fantastic management.
AB Dynamics moved into two-bagger territory, with a remarkable run up since the start of November; it now sits on a P/E of 48, which surely isn’t sustainable, but I will continue to hold, regardless of pull back. If I start meddling and trying to time the market, I know I’ll fail.
Wizz Air When I weighed this up I looked at Ryanair and Easyjet and thought all three companies appeared attractively valued, but that Wizz Air was better positioned – a more appealing valuation, growing market share and one of the youngest fleets in the business. On the final trading day of 2017 they finalised an order for new Airbus planes that will take them into the mid 2020’s.
Dialog Semiconductor were hit by a few warnings this year based on its relationship with Apple which accounts for 70% of its revenue, but apparently ready to bring semiconductor manufacturing in house (Dialog Semiconductor: A Reminder to Pay Attention). DLG’s share price took a few hits currently has me at a loss; I will await further clarification in Q1 of 2018.
I finally lost patience (and money) with Gattaca and Dunelm this year; in truth, had I formulated my current investing strategy before looking at these two, I wouldn’t have bought either – I held both of these too long in some feint hope they would recover. Lesson learned, if you’re not convinced by a company, don’t hold just because you want to make your money back; get out, put the money elsewhere.
Next continues to cause some concern; I topped up on a minor earnings upgrade, and remain convinced of the quality of this business, however they continue to struggle against faster growing, online competitors. Will 2018 be the year they get their act together and start to catch up?
What will the New Year hold? I’m not sure.
US equities sit on pretty lofty valuations, but worldwide equity returns have been very respectable.
In the UK, I think markets could at worst be considered ‘fairly valued’, and therefore remain happy to both hold my existing shares and make additional purchases wherever I find value. With only around 8% of my portfolio in cash, I remain keen to build up my reserves in case of a correction as well.
I try to follow macro events but don’t allow them to affect my investment decisions; however, it appears we may finally be seeing a program of interest rate rises globally which must surely put pressure on equities.
I’m keen to find a replacement to the emerging market Eastern European ETF in 2018; if you follow my CAPE posts, you’ll see that Eastern Europe still presents real opportunity from a value perspective.
I’m also intrigued by the possibility of India; I need to do far more research, but the attempts made to sort out their tax system last year should result in increased tax receipts to be spent on infrastructure. If you had to bet on one country for the next 50 years, India must be a contender; maybe a small-cap ETF is the way to go.
I’m also keen to continue diversifying away from the UK, for no other reason than diversification is rarely a bad idea. I will be looking to screen for equities abroad, trying to find quality growth where I can.
I’m pretty happy with my investment methodology, it’s something that has been honed over a number of years and seems to be working; that being said, I continue to develop and grow it based on new influences and education.
I was honoured to have been invited to contribute a Q&A interview to DIY Investor Magazine this year (you can read it here); when I had the idea to start this site, I had no idea where it would go, or whether anyone would even read it. It has been an education for me, and an inspiration to follow my interests and passions. I am excited to see what 2018 has in store.
Our little Twitter UK investing community isn’t so little anymore! It’s been fantastic to meet new contributors this year and I know they will make me a better investor in 2018. If you’re not yet involved, join us – @britishinvestor
I wish you all a happy and prosperous 2018.
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