So as the markets close for the last time in 2013 I've totaled up my figures for this year in terms of investment performance as well as over my investment lifetime. All stocks are valued to bid prices, with dealing charges and stamp duty costs included (but before capital gains tax). As I am often adding to / withdrawing from my portfolio for various reasons I track IRR as my main investment metric and benchmark myself to the FTSE All Share and Small Cap Indices:
2013
My IRR: 50.45%
FTSE All Share IRR: 14.22%
FTSE Small Cap IRR: 40.00%
Lifetime (Began 2011):
My IRR: 44.88%
FTSE All Share IRR: 9.48%
FTSE Small Cap IRR: 29.06%
So it's been another year of a strong bull market in small and micro caps UK stocks and a rising tide has lifted all boats - my 50.45% IRR doesn't look all that exceptional when you consider the Small Cap index has risen a whopping 40% this year. In fact I'm surprised I'm actually ahead of the index at all as looking around the UK small cap market now the equities that are really taking off are often low-quality 'story stocks' as the bull market becomes more mature. This year I feel like I've been pretty lucky overall with my investments as I've had so many different ones work out positively and few losers (C21, CLIG and 3LEG have been the main detractors). I certainly still expect my Lifetime IRR to trend down over time to a more reasonable figure as the benchmark IRRs mean-revert to their long term averages although I'm happy with a ~16% out-performance since I began investing.
My main mistakes this year have been those of selling investments too early. As a fundamentals-oriented investor, I have a natural bias towards over-focusing on two of the three main sources of empirically confirmed equity out-performance (value and quality) and ignoring the third - momentum. Whilst I'm aware of this and try to compensate by holding on to well performing equities that were cheap until I feel full value has been realised I have sold a number of stocks that have gone on to do very well in a relatively short period post selling. Staffline I sold at 339p and it went on to touch over 600p. I sold ACSO at 340p…
impressive stuff. i have just checked your last portfolio blog update and am pleased to see i own 3 shares you do (CLIG, SEA and 3LEG), so i am hoping 'great minds think alike' for 2014 :-) At some point this small-cap bull charge will end, probably quite suddenly, so the trick is to ensure we do not get carried away. that generally involves selling too early...!
