Last year I reviewed my portfolio for 2018-‘Marched up to the top of the hill and down again’. it was meant to encourage investors, after a difficult year, to ‘soldier on’. The FTSE 100 is still 144 points(2%) below the level it was on 1st January 2018 so 2019 merely retraced some of the 2018 losses. No wonder even experienced and successful investors feel that it has been a disappointing two years. We all need a little encouragement, I had more than a decade learning (painfully) about investing which fortunately coincided with the Thatcher era when the generosity of the privatisation schemes masked my own losses due to inexperience(some) and incompetence(lots).

In 1992 I left the Army and felt I had a responsibility to my family to invest methodically and I have subsequently managed 15% annual portfolio returns, with a standard deviation of 15%. In 2018, against a difficult investing backdrop, I gained 5%. In 2019 I did a little better with 20.18%. The diagram below shows the portfolio in blue and the FTSE 100 index in red throughout the year with weekly datapoints.

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I’m frequently asked what is my timeframe and why the FTSE 100 as my benchmark. My parents were born in the 1920’s and latterly I managed their investments and avoided IHT on a seven figure portfolio using business property relief from AIM shares that was largely handed onto their adult grandchildren. I was born in the 1950s and my grandchildren will hopefully still be benefiting from my investments into the 22nd century. So I like to look at many decades as my investment timeframe and helpfully The Credit Suisse Global Investment Returns Yearbook 2019 of UK equity returns has a long timeframe which I can take as a guide. It suggests that from 1900 to 2018 the UK market returned 7.2% real returns with a standard deviation of 19.7%. Of course the study looks at ‘real returns’, that is after inflation, while my returns are not inflation adjusted but I focus on both outperforming the market by a few percentage points and doing so with a little less volatility, both measures are equally important to me. The FTSE 100 is my benchmark because that is what I could earn, less modest expenses and slippage, without taking any interest in investments

Modest outperformance is in my view within the…

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