Should you actively manage your portfolio, or not?
This is a question I paused to consider earlier today when I saw that a company that I admired, Diploma, started appearing on my radar again. I had owned it previously, and according to my records, sold out in 2012, thinking it was ahead of itself.
Looking at its performance since 05-Apr-2012, I see that its shares are up nearly 60%. Compare that with the ASX (FTSE All-Share), which is up only 17%. It just goes to show how owning good quality companies, and just sitting on them, can really pay off.
This got me to thinking that all that stock churning is a complete waste of time. However, when I looked at my actual track record, I discovered that my portfolio was up 81% (properly adjusted for inflows/outflows and trading costs, but excluding dividends). That came as rather a surprise to me, and suggested to me that I should keep doing what I’m doing.
I also feel that I have learned more about investing in the last year and a half than I had previously. It’s a continual learning exercise. I still made many silly mistakes. It’s impossible to win on every share, of course, but some decisions are sounder than others.
For the last few months, I have slowly begun the process of taking money out of my unit trusts, and making my own investment decisions. My long term (not just since 2012) record looks considerably better than the results of my unit trusts; and that even ignores dividends.
