The STRIDE Blog

#10 Little Acorns: 10.53% Up After First Year

It's been a massive education, my first year as a value investor. I watched through my fingers as the markets crashed in August; the FTSE 100's silent crash, preceeding 'Black Monday' in China. My portfolio might not have retained its 15% high of April - can't say I was really expecting that though - but it has beaten every major market and is a healthy 10.53% up. When I took into account the strength of the US Dollar, the result was a huge surprise.

It's been a while ...

To the followers of Little Acorns who've noticed the distinct lack of posts over the past few months: I'm sorry to you all. My absence was due to some personal stuff I had to sort out. It is now sorted and I'm well and truly back to the blog.

I can't believe it's been a year since I first embarked on my value investing mission. For anyone new to this series of posts, I'm a freelance writer who approached STRIDE and offered myself and my savings up as a guinea pig. They gave me free access to the platform in exchange for a warts and all record of my progress - and the rest is up to me. Here are my portfolio principles:

  • I only buy into businesses that STRIDE rates as high-scoring 3D targets.
  • I sell when STRIDE tells me to.
  • I am working with a Bold investor profile, which gives me the largest choice in terms of targets because it includes businesses of all market cap sizes, from micro to large.
  • My portfolio contains multiple regions, sectors and currencies.
  • I buy roughly the same value of stock in every business.
  • I keep 10% in cash, in case I do something silly like prang my car (I did earlier this year.)

I've read a lot about value investing but, prior to Little Acorns, never had the courage to actually do it. If you're where I was year ago and decide after reading this blog you'd like to learn more, I recommend you get yourself a *insert your favourite hot beverage here* and check out the STRIDE library.

Year 1 Review

On 14th November 2014, I invested $108,000. After incurring $2700 in fees and charges, my starting portfolio value was:

Total Value: $105,300

Stocks x 16: $57,198.40     Cash: $48,753.94  

Currencies: USD; GBP; EUR; KRW; TWD; MYR; SGD; JPY; AUD; CAD; SEK

Countries: USA; England; Germany; Korea; Taiwan; Malaysia; Singapore; Japan; Australia; Canada; Sweden

Sectors: Chemicals; Capital Markets; Internet and Catalogue Retail; Real Estate Management and Development; Commercial Servies; Household Durables; IT Services, Banks; Software; Electronic Equipment, Instruments and Components; Machinery; Financial Services

Today is 10th November 2015 and Little Acorns now looks like this:

Total Value: $130,435.11

Stocks x 28: $105,150.55  Cash: $25,284 (I deposited another $10,000 in summer 2015).

Currencies: USD; GBP; EUR; KRW; TWD; MYR; SGD; JPY; AUD; CAD; SEK; ZAR; HKD

Countries: USA; England; Germany; Korea; Taiwan; Malaysia; Singapore; Japan; Australia; Canada; Sweden; South Africa; China

Sectors: Chemicals; Capital Markets; Internet and Catalogue Retail; Real Estate Management and Development; Commercial Servies; Household Durables; IT Services, Banks; Software; Electronic Equipment, Instruments and Components; Machinery; Financial Services

Total Fees Paid: ~$3,000 (2.54%) 

Total Gain Before Fees: 13.12%

Total Gain After Fees: 10.53% 

Best performer - Homeritz: 109.06%

Worst performer - FT Group Co: -68.26%

Stocks bought - 29

Stocks sold - 1: Ikyu 77% gain

3D value stocks vs global indices, London property market, UK banks and FX

I am quietly pleased at my gains. 10.5% you say? Surely it was up to 15% back in the spring? Yes, it was. But if we scratch the surface of these numbers and look a little deeper, you'll see why I'm feeling so satisfied with this result. 

First of all, I have beaten every major market index in the world apart from the super-volatile Nikkei 225. Take a look at the new performance page for more details. 

I have also beaten the London property market and every UK savings account (no surpise there):

You get the picture.

(I used Yahoo Finance for the index data and the best savings account I could find was with Santander, at the time of writing.)

Then there is the question of how currency has effected my 10.5%.

I set out to create a highly diversified portfolio that included multiple sectors, territories and currencies. I think you'll agree, I managed this. The benefits of this approach are huge. While my biggest loser was 68% down at time of writing, my biggest winner was up 109%. The negative correlation diversification brings has balanced out my losses beautifully over the year. It made the plummeting August markets much easier to stomach because I always had stocks that were soaring, despite the doom and gloom across the world.

The down side of holding so many currencies is that you have to pick one into which you denominate the portfolio. I chose USD. The dollar is so strong right now that this decision has effectively wiped a stack of value off my holdings denominated in other currencies.

If the DXY had stayed where it was a year ago, at around 87, I'd now be looking at gains of over 20%. While I stay in these currencies / holdings, this will fluctuate and really doesn't mean anything until I convert back to my base currency - it is merely for reporting. 

Looking ahead to year 2

At the moment, the vast majority of my stocks are holds. A few have once again become buys. My current slice model still fits me very well: I'm aiming for 30 slices of $4000 each. This means I still have enough cash, after setting aside my 10%, to buy three new slices without selling anything. 

Here's my latest email update. See you next month!

 

Topics: 3D Value Investing, Little Acorns Portfolio

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