September Review

Doom, gloom and trouble

Another volatile month for the market leaves the EV Fund on more or less the same footing as last review. The market has swung around, but ends the month down 1.9%. EV Fund ends the month down 0.8% – disappointingly down, but at least better than the market performance. Since inception, the fund is down 5.6%. In the same period, the market is down 12.3%, giving an outperformance of 6.7%.

As ever, I take little from the month-by-month statistics except a chance to logically reflect on my positions, their price movements, and any steps I need to take. The four biggest movers have moved on essentially no news, and haven’t moved significantly enough to warrant me reconsidering their positions in the portfolio. September looks to be a news-filled month, though, with RSM Tenon and Barratt (off the top of my head) releasing statements. Barratt will be especially interesting – given their steep decline since my purchase, I’ll be crossing my fingers that nothing too unexpected comes up. I suspect most of the drop is simply due to the high-beta nature of the stock and nothing company specific, so I keep a relaxed view on their price movements.

Only two transactions were completed in this last period – buying both Communisis and Creston after having blogged ambivalently about the stocks and then watched hefty declines. Both appeared decent but low conviction picks to begin with, but 30% drops and positive news left me far more convinced of my margin of safety.

All in all, then, not a great deal to say! I won’t be making a significant changes to my portfolio, largely because I haven’t really changed my opinion, but also because trading costs are so prohibitively expensive. Last month I reported that the fund effectively ‘started’ 1.7% down on the market due to trading costs – and that was only buying. Selling some of my small cap positions and then buying others is twice the trading activity, and while the costs are weighted to the buying leg (stamp duty) I’d still rather not pay anything at all.

The macroeconomy doesn’t bother me. The vast majority of the stocks I’ve picked are either resilient to downturns or have performed admirably up to now – leaving swift economic recovery as more of an unexpected bonus than a lynchpin of my strategy. Roll on the trading season and wave goodbye to the summer volatility – though with the global aches and pains not yet addressed, I suspect we’ll be riding more rollercoasters in the next few months!

I should probably note my title is entirely tongue-in-cheek. Markets shift and valuations move, but sentiment is always transient. Remember the media are there to make mundane events news-worthy, and have faith in the value of your investments!

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