Dolmens and doldrums

Strange and fractious times on the markets. Not enough of a hammering to be a crash, but perhaps some of the froth is coming off the top. As it happens I have a significant amount of capital I want to invest. Looking at the sturm und drang on UK share forums, looks like there were many folk balls-deep in Tech, but out in the real world it seems a bit of a meh so far. Of which more later.

What’s a fellow to do, eh? Time to take advantage of a bright winter day to look at some ancient stones near Avebury. As soon as we came past the main stone circle we saw that World + Dog was out. It probably wasn’t the wisest thing to go on a Sunday, after all part of the point of being a retiree is that you avoid the times when others are using the great outdoors. You need other people to make a music concert work, or presumably a football match, and arguably being in a restaurant on your own is a little bit lonesome, but the outdoors is generally best enjoyed with you and yours. The Ermine household switched to the wider landscape and visited Devil’s Den, a dolmen I haven’t seen up to now. We had it largely to ourselves, and very fine it was, too.

We parked at Gravel Hill car park and walked down to it. It was a bright day, and you could see the dolmen from above, there is a permissive footpath to the site. You are aware of old money and the Norman pattern of land ownership in the UK as you pass the horseyculture gallops, but looking at the map the National Trust is making inroads into the estate 😉 In theory National cycle path 403 and 45 would take me from Marlborough where there is a campsite to Avebury, but I only have a road bike, and it’s not clear to me whether the NCN cycle tracks need something more hardy.

The downs echoed with the mewing calls of the red kites, which seem to have broken out of their Welsh stronghold busy searching for carrion in the Wiltshire chalk downs

unlike most birds of prey that have been persecuted for centuries by English landowners and their gamekeepers, the red kites don’t seem to have come into much conflict with humans, being carrion eaters. They approached quite close, close enough to see their markings

and diagnostic fan-shaped tail.

Part of the reason we went on the weekend is because though Avebury is an easy day-trip from Somerset, being in the next county, Mrs Ermine wanted to sample the delights of the Gourmet Goat Farmer, which doesn’t do Mondays and Tuesdays. It’s quite a rinky-dink sort of operation. We had a goat burger, served on a piece of slate, and watched one young couple down from London at a guess.

Inside the goat place

As they left the lady bought about ten of the fancy hand-made soaps, clearing the stock out. Artisanal soap is all very well but people never seem to get towards the end of the bars, because they go manky after a while. And millennials don’t use bars of soap, anyway. The inquiring mustelid mind still wants to know how the hell you make soap out of goat’s milk, but goat’s milk soap really does seem to be a thing with an Amazon category of its own. Ain’t capitalism a wonderful thing it its multifarious diversity?

I guess manufacturers use the chemicals and sodium laureth sulfate in their soaps because it doesn’t go off by the time you get to the end. Sure, people used to make soap by boiling animal fat and lye but we don’t do that any more because it stinks after a while. But what the hell, they were buying a dream. So were we in a way, eating grass-fed goat served on a piece of slate rather than a corn-fed Smithfield CAFOD beef patty from Mickey D’s. It was pretty decent, though at more than twice the price of Ronald McDonald’s offering one would hope so 😉

You can wander round the back and see what you are eating. Goats have a rep for being escapologists, so I expected to see them up on the roof or halfway up a tree, but clearly the Gourmet Goat Farmer has discovered the secret of keeping their goats on the ground. Lots of hay, it seems

I always thought goats had sticky-uppy ears, more Alsatian than King Charles spaniel, but not these guys. The 45 degree slitty eyes are weird. They sound like sheep to me.

The sun was starting to go down in the short winter days as we approached West Kennett Long Barrow

The low sun and a mackerel sky showed Silbury Hill off to good effect – this is a 30m high manmade prehistoric mound of chalk

Doldrums

The financial system still looks like a hostile environment for returns, with valuations still too high. Flying pigs and incoming, 360. At least now the market seems antsy/becalmed, which beats lifting off into the stratosphere with afterburners. Tech has taken a bath, which is not before time IMO, but otherwise the signal’s not strong at this time. It could be a mini-crash-ette. Or it could be the Big One waiting in the wings. I have plotted out how much I want to buy over a period of about two years. I managed to make myself buy some VWRL in my Vanguard ISA, though the price was still well above my long-term average price. The good thing about Vanguard is you don’t pay dealing fees with batch ordering, so I can accumulate modest purchases over time. I need to move most of the holdings bought that way from Vanguard to somewhere else, because of percentage fees.

Trustnet tell us most funds lost money in January. I don’t see that as a bad thing. My main exposure to tech is VWRL, which is half US stocks.  If you decompose VWRL into its components, it is 25% US tech, indeed skimming an Ermine Claw down the top 10 holdings shows 15%

full of the usual Big Tech suspects, including a hefty slug of the odious Elon Musk’s operation. I really would like VWRL to come below £70 which is my average purchase price. Over the next couple of years I would like to double my holding. Which means I need prices to go down. As perma-bear GMO says

let the Wild Rumpus begin

Barring the flash crash of 2020, we are in a long bull run pumped up by some seriously funny money, the whole basis of current valuations are the crystallised form of it’s all different now? Really? It’s never been all different the last however many times people have said that. Let’s look on the bright side, valuations haven’t actually reached dot com days which is the last time we drank the Tech is God Kool-Aid, so it’s all different this time.

Philosophers tell us virtual reality is the new real reality, so Meta can expand to the edges of consciousness. As if people don’t spend too much time in their damn phones as it is.  Let’s hear it from Ruffer and  Lux Capital

Masses have thrown caution to the wind and diligence to the dogs.

Woof. Lux are of course talking their book in the rest of that screed, but that doesn’t invalidate the comment. Ruffer and Lux are very different investing styles, so if they both feel the need for that quote perhaps there is something odd going on across the board. But seriously, I could use a decent crash, #FlyingPigs360 in the words of Michael Burry, he of the Big Short. Seriously. You gotta admire somebody who shorts Elon Musk.

In other news, inflation and power prices are increasing. Quite why this has come as a sudden surprise to people who should know better beats me. Interest rates have been on the floor for 10 years to try and dodge the consequences of the global financial crisis and pouring money into the system has to go somewhere. Cheap energy is dirty and running out. You always end up buying it from somewhere you’d rather not deal with – it was the Arabs in the 1970s and 1980s, it’s Putin now. These guys still have all the dirty stuff, as well as values that right-thinking people don’t always share, but when it comes to freezing or looking the other way, well when they have you by the balls then hearts and minds follow, eh?

The age-old problem of getting income from capital

An Ermine can see a time when I want to use the income from my ISA to top up my pension, which will track inflation up to a point, but probably not what we seem to have coming down the pike. I also tend towards fat-FIRE as I get older 😉 Let’s get this into perspective though – that means goat burgers in scenic settings rather than new cars every three years…

In the early days I thought I would have to draw my pension early, thereby reducing the annual income from it. So I saved in AVCs, planning to take the entire amount tax-free, adding to my ISA and make a top-up income.

As it happened George Osborne changed the rules and that didn’t need to happen. But the attempt is in the fossil record of my ISA shareholdings, in the high-yield portfolio (HYP). I never sold it, because one day I would want the income. It’s easier to reinvest income than to switch on income all of a sudden, particularly as you tend to want to start doing that as the economy is in a hole.

Favouring income gives up capital growth. It is a classic speed over comfort tradeoff. If you are ten years or more off getting to draw a SIPP, then do not favour income. People in that position are trying to win the war. indeedably deconstructed it well. When I read his article, I wondered if I have made a mistake selecting VWRL rather than VHYL. Why would I choose a tax of 5% p.a. in total return by excluding non-dividend payers? Like Apple, BRK, AMZN? For one simple reason

In the depths of a stock market winter, so that I don’t have to choose how much capital to sell down to live from day to day

I can give up some total return because I am not accumulating for 30 years. If I wanted to leave a big legacy, for example because I had middle class kids and I foresee the hollowing out of the workplace and opportunities for them because average is over, then I might feel differently about that. I have had two experiences which make me not want to burn capital in a stock market winter. The first was in the runout of the dotcom bust, which was a long, dreary, sideways slip-sliding away over several years after the initial crash. That’s the sort of thing that clobbers ‘I’ll just sell some accumulation units every year’ because everybody has a plan. Until they get punched in the face. The standard solution, carrying a couple of years of cash as a float, would have dried up, because that grind was more than a couple of years.

Maybe the dotcom bust was a particularly egregious piece of irrational exuberance, but finance is fat-tailed, lows (and highs) happens more often that people think. And if ERN says that runout would have killed a steady 4% withdrawer, then I don’t fancy that.

The second experience was trying to retire early out from the GFC. The answer to the question “how much can I spend” was always “as little as possible” so that I would be able to maximise my AVC contributions through salary sacrifice while working, and always fill my ISA from what was left, which drifted down towards minimum wage through salary sacrifice. This was easier because I had a paid off house. ISA limits were lower back in the day, ~12k in 2012. My current self is better off because of that, but I don’t want to live like that again. I appreciate still having most of the original HYP, which means I don’t have to make that VHYL/VWRL call now.

the wider setting

The West is clearly in decline. Declinism is of course the general lament of people getting older since humanity began, as they project the micro onto the macro 😉 That doesn’t mean it isn’t happening. I can see costs rising, which is not to repudiate the fact that an awful lot of Britons are probably in a more precarious position. The obvious hazards are:

healthcare

Universal healthcare is likely to become less universal in the UK, and it is already a lot less universal than it’s made out to be, although it probably is still true that if you are in a RTA they don’t check your ability to pay before trying to fix you up. At the moment I have managed to avoid bothering the health system that much, but as you get older the likelihood of that increases. There are some things you can do to improve the odds – while I have never darkened the doors of a gym since leaving school I walk to places a lot of younger folk seem to drive to. There are also things you can not do to improve the odds – avoiding all fast food, gratuitous sugar and drinking less than my younger self are also ways to shift the balance of probabilities. But I have seen people much more clean-living succumb to ill-health. And it is pretty obvious to me that the direction of travel in healthcare is more like the US rather than away from that. There’s profit to be made, and since we don’t stand for principles when faced with that, we know where it will go.

energy

Hard to say about the rise in cost of living etc in terms of energy. An awful lot of claptrap is talked about energy in the home – the fuss about insulation for instance. The materials are cheap and easy to DIY for loft insulation, I seem to recall I paid less than £2 a roll when I did that, and a little bit of that goes a long way, and if you had uninsulated cavity walls then you have probably had them filled because it’s not that dear. These are the easy wins, and after that it gets stupendously hard and expensive very fast, though double glazing is a sort of intermediate if you haven’t got it yet.

Heat pumps seems to be a bonkers technology. They are expensive to retrofit because of the civil works, and ever since Margaret Thatcher did for council housing and the Parker-Morris standards, Britain’s housebuilders have been building rabbit-hutches. Thus inviting the obvious question ‘so where exactly would Sir like to put this humongous monstrosity of an air handler for your heat pump?’.

Where would you like this to go on you rabbit-hutch, sir?

Heat pumps are more complex, and wherever I see complexity in a system I see future maintenance hazard. Plus all those great big fans, I foresee a godawful din rising above our towns as no doubt people will fit the cheapest Chinese bearings that will wear out quickly. Still, I suppose it will be good for employment. These rabbit hutches would have been better served by a communal or district heating system installed at the time of building, which would address the space and noise problem too. Let’s hear it from the Guardian, who are normally highly into all things green

Those taking out a gas boiler are highly unlikely to see any savings and could well end up paying more each year. Octopus Energy says in a poorly insulated home it will cost as much as 40% more to run a heat pump rather than a traditional boiler. This is because the cost of electricity includes carbon taxes and subsidies to support low-carbon energy projects.

Hmm, well, that’s a no, then. I am considering switching to gas for cooking for precisely that reason – I don’t see why I should subsidise other people’s energy projects when I roast a chicken, and the slow startup of the hob is tedious. I am going to keep a gas boiler running for as long as I can. Even at current prices, I can buy an lot of years of gas heating for the £15,000 capital cost of installing a heat pump, and the extra cost of making good after having to massively increase the size of the radiators for the fact that is is a gutless low-temperature power source that isn’t really up to the job.

I am also tempted again in the direction of a wood burner, despite the hate campaign on the technology in the Guardian. This is from a resilience point of view rather than lifestyle. I am cheered that finally building regs now mandate feeding the intake to a wood burner from the outside, rather than a massive ventilation brick that you have to cover to stop it getting freezing in winter, and getting a CO monitor to make sure the wood burner isn’t fighting you for oxygen. An outside direct intake was always the obvious right way to do this job.

As for battery walls inside the home, wonder how you put the fire out? Whatever you do, don’t try and hose the bugger down. That’s the trouble with high density energy storage, it’s highly dangerous store of energy 😉 You wouldn’t be allowed to keep that much kWh petrol or propane in a domestic setting, you need to keep that outside.

and more diffuse issues

The coarsening of debate, the brazen corruption, the casual impoverishment and nastiness of the ‘welfare’ system, general loss of contact ‘twixt falcon and falconer. Maybe that is just what decline looks like, but it’s not good.

Digging up the blotters

In the quiet period between Christmas and New Year it’s good to turn over the old grey matter, in amongst the usual excesses. I have a large amount of data I would like some answers from, which are the tapes of all my share transactions from the beginnings in 2009. The very first forays in 2009 are only summarised by year, in an Excel spreadsheet, but I only used £3600 of my £7200 ISA allowance then, putting the rest into a cash ISA. D’oh. Ermine standing next to big open goal of a crashed stock market. And buys a cash ISA with half. OTOH I didn’t know if my job was going to go titsup like, tomorrow. So it was the best I could do given the knowledge I had to hand.

Platforms make it hard to catch that sort of raw data, and since I have been kicked out of three platforms (Interactive Investor no less than twice due to their rapacious greed) I observe they all present it differently. No doubt the modern way is to diddle on your smartphone with all your data aggregated and sold to the highest bidder, but I still use a real computer and my own data. The first law of signal processing is what has once been lost can never be regained, so each time I downloaded the digital equivalent of the blotters before I cleared the account by transferring the assets out to a lower cost ISA platform.

I did try and get a feeling of P/L using Excel. The downside of Excel was that it started to get slow after about eight years, which probably indicates rotten programming on my part. Excel is nasty, as the computing logic is distributed over many cells depending on each other, it is hard to trace. With the last move to iWeb I integrated a summary of the position into Quicken, but hung on to the raw data. I hoped one day to be able to use that – a record of every transaction and countless dividend payments.

I tackled R again. This is a program to munge large amounts of data, under the general heading of data science. It’s the sort of thing that makes Dominic Cummings feel all warm and fuzzy inside when he’s not sticking the boot into his old boss. It is not enough to succeed, others must fail, eh, Dom? In finance Real Men use something a lot better, but Rstudio is free and well documented.

I was intrigued to learn over that dividends have bought two years worth of contributions at current rates, I would say the high-yield portfolio (HYP) that was so difficult to believe in in the early days came good and stayed good. My excel spreadsheet lumped all dividends together, making it hard to split off the difference between that and the passive part. But the transaction tapes still carry the information and R could break it out. I could start to look at the in-ISA total return (TR) because there is enough information in the downloaded dividend payments to ascribe a dividend to its parent stock. And then to make R do a cumulative sum along the timeline. Some things are surprisingly easy to do in R, cumulative sum being one of them, some things that look easy like looping iteratively seemed harder to me than they should have been. But I have not been coding for a living for over 10 years, perhaps there are stylistic changes in modern programming that are drifting away from how I learned to approach things.

I am happy enough with the results, though this was easy enough to see in Excel by comparing the totals across all my ISA platforms with the contributions. This gets harder as you start drawing out, the R library I use has the functions to unitise, which fixes that. The story is not complete, because it started in the crawl from the 2008 crash and as of writing ends on a bull market that has not yet surrendered to old age. #FlyingPigs360 and all that. The HYP shows dividends are less volatile than the market value in a crash. I am grateful to my younger self for testing that. Dividends aren’t immune to market sentiment, particularly on the individual company basis, which is why greybeards buy investment trusts where the dividend is smoothed over years. They swap that for amplified capital value gyrations because of the closed-end nature and discounts and premiums.

Never be a forced seller of an investment trust. It’s worse than being a forced seller of an index fund 😉 If you are the sort that coolly and logically sells down units of capital for your income, even through a crash, ITs are very definitely not for you, because the discount will tax you more into the low-water mark, discounts widen in times of market stress. Buy ITs in the low water mark, don’t sell ‘em. If you have to sell them into a suckout, short them, and benefit from the discount opening up. This is a specific case of the general principle of investing in volatile assets all round. Never be a forced seller. In my book if you have to sell index units to realise annual income, you are a forced seller. But hey, the theory is great. You can make all this sound grand with the Guyton-Klinger rules etc. But you’re still a forced seller, and ERN shows what that can do to your lifestyle. Forced sellers don’t get to choose, fire sales aren’t pretty in tough times.

a fire sale in tough times

It seems FI/RE forerunners in the UK on the fool.co.uk messageboards spawned some of the HYP ideas. There was much more talk in the early days of using yield for income. Back in the day you could do that, roughly equivalent to 5% SWR. Tech ate much of the investable universe since then. And just like in the dotcom bust, tech doesn’t pay dividends if it can avoid it. Tech is always about the sizzle, not the steak.

It’s good to see old theories vindicated. Monevator gave up on the demonstration HYP because it started to lose popularity as Bogleheads took over the investing scene. One of his posts early in my journey was shortly before I bought MRCH (should you swap your HYP for an investment trust at a discount)

I started with an investment trust, which happened to be MRCH, and skipped selling the HYP I didn’t have. Monevator probably sold his ITs when the discount cleared (2010 to 2013-ish in this case by inspection) and bought his HYP back for all I know. Perhaps the TR rip out of 2010 was an example of the discount narrowing. I do know MRCH was one of my early purchases, precisely as a result of the discount logic.

In other words, for every 90p you spent, you effectively bought £1 of the trust’s underlying investments. Such a discount is great if you’re buying income, since a trust’s income is generated by its underlying investments. All things being equal, a 10% discount means roughly a 10% higher income for you.

MRCH share price has had the crap beaten out of it over the years, though it has kept its TR head above the FTAS TR. The TR shows up mainly in an income for getting on for 10 years

In my own version of this in R, I run my holding of MRCH, and match the SP plus dividends received with what I would have seen along time for the FT all-share total return or the FTSE100 total return. However, if I have bought any more, as is the case here, that really screws up the visuals by putting a step in the chart when I buy more stock. The discount opens this up when things go bad. This happened in 2016 (wonder what happened then, eh?) as well as 2020. I will confess to shorting some of this outside the ISA in early 2020 as well as boosting my ISA holding later in the year. That adds jagged noise to the chart.

So for this chart I use the Yahoo adjusted prices for the chart as of my first purchase. I tested against the real evidence from the trade and divi data for a period from one purchase to just before the next, and concluded Yahoo either do an okay job of the adjusted prices. Or they balls it up dramatically with some instruments, usually by changing the scale factor from GBp to GBP (yeah, it’s subtle, see what they did there?). If you want to see this look at the HSBC fund CUKX.L which at the time of writing goes crazy on the 4th of July 2021.

Anyway, looking at the cyan instrument price (R calls it steel blue) plot of share price, terrible investment, trailed yellow and blue traces of the FTSE100 and all-share TR. But the green TR line shows dividends made up for that, forcing open a gap between SP and TR. TR didn’t fall behind those indices in the period I owned it in terms of the money returned. Because I started my investing career in the sunset of my human-capital career, exchanging share price appreciation for more income along the way made sense to me.

I started to find looking for individual stocks more tiresome and plain harder to do from 2015 on as valuations drifted up.

I read this article on using a single world tracker. I didn’t sell the HYP I had. VWRL seemed a good bet to go forward, and my AVC/SIPP had been a 50:50 Global:FTSE100 fund. I moved that into the ISA, keeping the draw from the SIPP under the personal allowance for a few years to get it out mostly tax-free. My largest holding is VWRL. I have never sold VWRL, but I have bought it many times to add to that holding. R tells me that if I divide what I paid for it by the shares held I paid an average price of £69 a share.

VWRL has given me a reasonable 34% total return on the investment, but the yield blows. R tells me members of the HYP occupy the first 19 slots of the securities ordered by total return(TR)%. Because I started with the HYP in a market suckout these were bought at lower valuations, and have been held longest, so it isn’t surprising that their TR% is higher. This is NOT the same as saying these are inherently better than say VWRL. I got a poor relative TR from VWRL because I started later. Valuation, timing and time in the market matters.

I got what I wanted, a serviceable income from equities. Lars’s article came out in 2015, a year after Osborne changed the ground rules on pensions. Back then VGLS100 was the default go-to index without thinking choice, but the UK version is different from the US flavour.

the HYP and income

Buying income takes ages in an ISA. If you go all-in at say 4% then each year you can add about £800 dividend income each year. It would take five years investing into an ISA flat out to match an annual payout of Jobseeker’s Allowance. On the plus side, you don’t get spotty tossers ’employed’ by the DWP to give you shit about taking any job in any field after a month. Sometimes I wonder if the DWP is a job creation scheme for administrators to be horrible to the unemployed.

I built the HYP over about five years. That cost me TR, because I ignored the world market in the ISA, that was what my AVCs were for. However, I did buy the income at better rates. I will sell gold in the ISA and rebuy it outside to give me extra ISA capacity.

The cost of living and tax rises will probably cost me about £2000 extra a year, and at the moment I don’t need to dip into the ISA yet, because I have simplified calls on my income. But these rises are coming my way, and I don’t see the increase in energy costs stopping this time next year. So I need to start lifting the income from the ISA, because I get the feeling that tax-free income is going to be a valuable thing to have in years to come.

the Art of Execution

I bought this book, H/T Monevator. The main takeaway is track dogs better and shoot them earlier. In particular, if something falls 20%, then do something. Either it is a conviction stock, in which case buy more since it is now a fifth on sale, or it isn’t a conviction stock, in which case GTFO. Coming back from a 20% loss is a lot easier than coming back from a 50% loss. I have been fortunate in recent years that most purchases haven’t done that, bar some of the Covid hit, which was an exogenous non-stock-specific hit more suited to shorting collective indices and ITs.

But it would have saved me money way back when handling AGK and TSCO. Using R would let me automate this early warning process. There is some caution in TAoE that an early warning is not as useful as an honest stop-loss because people prevaricate, ending up frozen like rabbits.

R also makes it easier to ask “given what I paid for this share, and the dividends I have collected, how is that doing versus the index TR”. There should be a way of making the index inform the tolerance of the share. The Art of Execution showed me I lack a process to get out, particularly for stock-specific risk, and this probably lowers my return. The effect is less because I have been investing across a bull market, and many of the HYP stocks are investment trusts so diversified.

When I list my purchases across all time in R , marked to market in the case of stuff I still hold, I have to get to the very last page, 61-65 out of 65 instruments I have owned to find four dogs that delivered a return of lower than -20%. They are from early days, I don’t hold any of these now.

They support TAoE, there’s no excuse for tolerating hits of more than 20%. My losses to all dogs was ~£5800. 20% seems to be battle tested in real markets over time. You need a 25% gain from a 20% loss to break even. Let things slide to 33% and you need a 50% gain, and you need a 100% gain to compensate for a 50% loss. Any more than that, just don’t go there. OTOH if you are trigger happy then you get pitched out by noise. A 10% loss is in itself not a reason to get out. I tolerated a 30%+ loss three times. That cost me £5600 of the losses. The rest was made in one 21% loss. So I find the 20-30% loss danger zone compelling.

You can’t make this mechanical, because it should be informed by the market as a whole. If the market falls by 20% that should point towards topping up. Or selling your HYP and buying investment trusts at a discount. R scores here by being able to track the market indices, giving valuable context.

On a positive note, I have run my winners. There are eight double-baggers or more on a TR basis, and three triple-baggers. TAoE doesn’t have any examples of people adding to their winners over time, which I have done with several. His Connoisseurs do the exact opposite, selling a little bit out every so often. But then these are not people investing dribs and drabs of money as they earn it into a capped contribution account like an ISA.

What did I learn from the exercise?

• I am less convinced by the passive mantra seeing some of these actual trajectories graphically, particularly against the index, although I have great respect for Lars, VWRL ain’t a bad way to go I will continue to build that stake, outside the ISA if necessary. I will build up the HYP to target about twice the anticipated top-up I want. There’s nothing wrong in pursuing more than one approach to getting a result, where both show a positive result but in different ways. Inflation may make income more valuable to me sooner than expected.
• I gained a greater respect for the HYP as a result of R’s summarisation of P/L. Enough to test against the provided example data to make sure I wasn’t using the code wrong, because it’s always a hazard with data science – you are at risk not just from garbage in but of making garbage out of perfectly good stuff in.
• No plan survives contact with the enemy. When either the world changes or my situation changes the plan may need to change. Ten years is enough to see quite a few serious needs for change. Ten years is enough to see quite a few serious needs for change. Sometimes they are opportunities, like Osborne’s changes to DC pension rules which meant I didn’t need to draw my main pension early because I could front-run it. Early on, I thought I needed the HYP, so I focused on that. I needed it less after a few years and Osborne’s changes, so I shifted to building up VWRL. The art of successful investing is probably in smoothing enough of the noise, while remaining responsive enough to change.
• The Art of Execution is right in that I need to post sentries in the R code to KO stuff that falls anywhere near 30% and to act if something falls 20%. That action may be buy more, or to let it go. This has happened rarely to me, but when it has, doing nothing has never been good.
• I may get useful signals for individual shares from comparing holdings against the FTSE100 index. This is UK specific because I only hold non-UK stocks in index ETFs.
• There is no useful difference for me between a FT All-share index compared with a FTSE100 index. The small and midcap tail isn’t strong enough to wag the FTSE100 dog. Historical TR data for the FTSE100 is easier to get and easier to keep updated using a FTSE100 Acc index fund.