I have reported here on Stockopedia my 2018(5%) and 2019(20%) portfolio performance in posts as a means, as I indicated in my first article, to encourage others to ‘soldier on’. Paul Marshall, the successful hedge fund manager, in his excellent recent book, 10 and a Half Lessons from Experience(ISBN 9781788166232) describes US Army David Hackworths keys to being a good soldier as similar to those of being a good investor:
‘Insight, receptivity and risk management. It takes insight to formulate a battle plan or thesis, receptivity to change the battle plan as the facts and circumstances change and risk management to avoid large losses and/or commit your resources to the most vital part of the battle-proper risk management is how you become an old soldier’
The last six weeks or so will find many investors feeling beaten up, so I contribute below my campaign notes and, while you might feel downbeat now, I have a few thoughts on how to win in the aftermath.
As I described in my 2019 review Hurricane Energy was my biggest holding and at the turn of the year I was convinced that the oil companies were exceptional value. I was only peripherally conscious of the news of virus that was wreaking havoc in China but it was gaining my attention and I was sufficiently interested by 22nd January, reviewing my Amazon account purchases, to order a stock of face masks for my family and, much to the amusement of fellow passengers and crew, to sanitise the seat on the aircraft taking me to Dubai for a months February sunshine.
While in Dubai I followed the news carefully. One of the podcasts I listen to, Macrovoices, gradually helped me understand the potential financial implications, initially on the Chinese economy and , as it developed, more widely. Like the mortgage mis selling that led to the 2007 financial crisis, the Covid warning signs were hiding in plain sight. Further research led me to another podcast, Peak Prosperity, which began daily reports on the spread of the virus. I started listening to the periodic WHO press conferences which underlined the authorities complacency. By Friday 14th February I was convinced that the implications were substantial, but the markets were not alive to the dangers. Amongst even my medical friends there was a feeling it was ‘just the flu’.
On Monday 17th February my investment diary shows that…
