The Trend and Patience are your friends: Thoughts of Saltydog Investor

The last few months have been encouraging for the private investor. The markets and our portfolios have risen steadily, that is until recently when we faced quite a sharp if small correction.

At this point there was undoubtedly a real urge to sell everything off and capitalise some of our gains.

Fortunately, this was resisted as we waited to see if the long-term upward trend in our favoured sectors had really been broken.

The last few days have proved this to have been a good decision as our portfolios have recovered and continue to rise. Hurray for the Green and Technology funds, not forgetting the Hydrogen companies.

At times like this with Brexit, Covid19 and the American election filling the airwaves with gloom and uncertainty, it must be a good time to examine the percentages allocated to your pie-chart.

I may not be the fastest fox in the forest anymore (if I ever was!), but I do spend care and attention on what form my pie-chart takes, and I do follow it fairly closely.

I am reminded of a Mark Twain saying. “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones that you did do. So throw off the bowlines. Sail away from the safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover.”

Sorry if that is a bit syrupy, but it appeals to the memories of my youth, and it does reflect in my own pie-charts which air on the optimistic side.

It also influences my views of the immediate economic future for the West and how it might influence the financial sectors that are available for us to invest into. Of course we have the advantage of being able to read our Saltydog numbers on a weekly basis, so I take no action until it is verified in the graphs.

My take on the near future is as follows..
 

• A vaccine will be found sooner rather than later to ease the pain of Covid19.
• We have seen the back of Mr Trump, and Biden will have the chance to stabilise the approach of the USA to the rest of the world and in particular, address the seriousness of climate control.
• It is in the interest of both the EU and the UK to come to a sensible arrangement on Brexit, and this should be in place by the end of the year.

OK, as I said, it is an optimistic view, and the big remaining problem for the West in particular is going to be how all the borrowed money is going to be absorbed/disappeared!

If there is any realism in the above it leaves me believing that “green and clean” and responsible funds still have a long distance to run. Similarly China and the UK funds will perhaps have a larger game to play in my portfolios.

We live in the age of technology so these funds will always feature, although I am wary of the currency fluctuations that can affect their value. As private investors we are fortunate that we can move from sector to sector, a joy not enjoyed by fund managers who are stuck by the investment percentage rules of their sector.

At the moment in the Unit Trust/OEIC arena it is also very difficult not to be involved with the Baillie Gifford fund managers, as they seem to be heading up many of the financial sectors, an amazing achievement.

I am not suggesting for a moment that any of you reading this should follow my sector suggestions, but I do believe that you should give thought to your own pie-charts and how you fill them.

Remember that in the last few months I have spent quite some time under anaesthetic and this has affected my memory.

As George Burns said “First you forget names and faces. Then you forget to zip your fly up, and finally you forget to pull it down”. Fortunately, I am only at stage one!

Best wishes and good luck with your investments.

Douglas. Founder & Chairman
www.saltydoginvestor.com