‘Look after the welfare of the boat and think of the whole voyage’: Thoughts of Saltydog Investor

There are stormy days, and calm sunny days, but in each case it is important to look after the welfare of the boat and think of the whole voyage.

 
Well, the last few weeks have certainly seen my own portfolios sail into a full-blown storm with an overall loss of more than 8%. The main culprits responsible for this retreat have been the green/renewable, technology and China funds, along with the hydrogen shares.

The UK funds have been pretty level and the TB Guinness global energy fund has made a gain.

Now at this point it’s worth observing that the total is still above the end of November figure. Under normal circumstances the annual gain is still substantial, but the big question is what does the immediate future hold in store?

The quandary that I have is pretty obvious. I cannot see that the argument I previously held for these sectors has changed. To me these sectors still seem to be a good place to be invested.

The world markets however disagree with my analysis, and in particular the American technology sector which seems to be taking a real bath.

I do understand that this sector was carrying an outlandishly high valuation, and was due for a correction, but the financial analysts seem to be putting the correction down to the fear of a potential rise in inflation in the USA, not an overvaluation of tech funds.

My simple thought on the subject is that a certain level of inflation would have been good as it would be eroding the value of the massive debts accumulated by governments during the covid pandemic.

This being the case, as I have no feel for the future direction of travel, I intend to err on the side of caution.
 

I will halve the funds which I hold in the sectors falling at the moment, and increase the amount in the UK funds and energy sectors

 
I will halve the funds which I hold in the sectors falling at the moment, and increase the amount in the UK funds and energy sectors. This should result in an increase in the cash sector.

If there is a continuation of the falls, then I will not lose as much money, but if it turns around then at least I will enjoy some of the gains while I reinvest.

I have never been any good at timing the markets and now I simply try to react after the events, but with a lower risk. A lesson learnt, rather like as a child when I soon learnt not to let my mother brush my hair when she was cross with my father!

I am still sticking with the UK sector funds for the following reasons:
 

• They are, historically, greatly undervalued.
• The amazing vaccine programme may release the UK from lockdown and restrictions earlier than other countries.
• Brexit does not yet appear to be restricting the inflow of money from abroad going into our technology and science industries. This is much greater than that forecasted by the talking heads prior to the referendum.
• There is considerable discussion about home-growing more of the produce and products that we consume, thereby reducing our balance of payments.
• So far there does not seem to have been a collapse in the value of sterling. In fact, the reverse is the situation and stronger sterling should also help the balance of payments. Although exporting does become more trying.

 
All of the above said, I admit I am looking through rose-tinted glasses hoping that the UK will be one of the first countries to pull out of the covid depression, and that our stock market will show the benefit to its investors.

Best wishes and good luck with your investments.

Douglas.

Founder & Chairman

saltydoginvestor