Value Investing in 2010 - A Review in Three Parts

Tuesday, Jan 11 2011 by
Value Investing in 2010  A Review in Three Parts

Part 1 - The Benefits of Not Buying a Ferrari

I'm still here, I'm still investing, and I didn't buy a Ferrari.  This years take-away lesson for me was that sticking with the plan and not spending your savings are both Good Things To Do. 

It's easy to talk about valuations, rebalancing, asset allocation, analyst projections and all the other stuff that private and professional investors love to bang on about.  But for me the most important thing is to just stay in the game and not get blown off track by the things that life throws at you.

Since selling my house in 2004 and 'lucking' into a sizeable chunk of capital, there have been an enormous number of things in the outside world that have wanted a slice of that money.  The two big chunks that escaped out of the ISA before I got serious about investing went into a Jaguar XK8 (which I had for two years and it lost about 20% a year - not a good investment even including the fun factor) and a franchise business for my wife (which has returned about 30% a year so far in a tough recession, so a somewhat better investment than the Jag).

Other than that I've fought off countless urges to spend the money on various enjoyable but ultimately goal-defeating items.  That is my main achievement for the year and hopefully that'll be a pattern that lasts into the distant future.

Part 2 - Cut the Crap, How Did The Portfolio Do?

Things were going okay until December which was crazy.  It produced a 12% gain which took the results for the year to over 22%, which is 10% clear of the iShares FTSE 100 ETF total return benchmark.  2010 is safely in the bag with results that were well worth the effort.

Relative to other small cap funds the results are not quite so impressive.  For example the Standard Life UK Smaller Companies fund managed 47% and on the smaller companies sector was up 30%.  In blog-land Mr Beddard over at Interactive Investor was up 27% and the amazing Running Capital managed 58%, although with a much higher work rate than my good lazy self.  Overall it seems to have been good times galore in the small cap camp. 

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This article is for information and discussion purposes only and nothing in it should be construed as a recommendation to invest or otherwise. The value of an investment may fall and an investor may lose all their money. Any investments referred to in this article may not be suitable for all investors.  Investors should always seek advice from a qualified investment adviser.

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About UK Value Investor

UK Value Investor

My name is John Kingham and I'm the editor of UK Value Investor, a blog and investment newsletter for defensive and income-focused value investors. I'm also the author of The Defensive Value Investor.I invest mostly in large and mid-cap dividend-paying stocks. My investment goal is to build and maintain a high yield, high growth, low risk portfolio. more »


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