Few among us live blameless lives. We may desire to be good and rational investors, but who here can truly say that he or she is perfect? Who has not succumbed to the temptation to take a shortcut or three in pursuit of higher returns, or an easier life, or because you know – you just know – what’s bound to happen next?
Who has has not coveted his neighbour’s assets?
Ah, yes, brothers and sisters, we are all sinners because we are but flesh and blood.
Each of us is burdened by the hanging weights of our failings. And there is but one way to free ourselves of the guilt of self-sabotage.
Confess! Confess! Confess!
Let us form our own investing Truth and Reconciliation Committee. A place where active and passive believers alike can air the dirty laundry buried at the bottom of the closet of our soul.
Never forget we are in good company. The most famed confession in investing is that of Harry Markowitz. The father of Modern Portfolio Theory once admitted he merely split his wealth 50:50 between stocks and bonds rather than computing his own efficient frontier – the latter being Markowitz’s own concept for maximising return and containing risk that led to his Nobel Prize.
Harry bared his soul so we too could free ourselves of the need to pretend we always act like good little rational economists.
So what have you been up to? Are you:
- A vicar who invests in arms companies?
- An active fund manager with a personal portfolio full of trackers?
- A dart-throwing monkey who secretly uses a stock screen?
Or jut another avowed passive investor who loves a bit of market-timing and runs a 10% ‘fun portfolio’ that somehow gets topped up again after every wipe out?
I’ll go first
I have not read a fund prospectus in years. I used to. But I’m not a lawyer and I found that reading 100-page documents full of Legalese and clauses that amounted to, “The fund manager can do what they damn well please at the end of the day” weren’t conducive to breaking the analysis paralysis that sets in if you try and do everything by the book.
I find that the fund factsheet, sticking to plain and simple funds, and reading around the subject are enough to tell me what I’m getting into.
I don’t have a deep knowledge of some of the indices I invest in. Does my emerging markets tracker include South Korea and Taiwan? I really don’t remember. I took a look when I first invested. It was full of BRICS, Eastern Europe, Asia and a little Middle East. It was by MSCI and later FTSE, it’s a Vanguard fund… I’m in the right ballpark and that will do, okay?
I have an active fund in my portfolio despite my position as a passive investing evangelist. The fund is the Aberforth Small Companies Investment Trust. I wanted to invest in the UK small-value sector. There aren’t any passive investing equivalents. The Investor recommended it to me. It was cheap. I researched it carefully and it seemed solid.
It’s done really well! I’m really SORRY!
What do you want from me? I’m only human! [Breaks down and sobs].
Okay. That feels a lot better, thanks.
Your turn.
The Accumulator
I’m a (mainly) passive investor who once bought an AIM share in his SIPP that dropped to a value of £0 within three months.
I know that I should only invest in passive funds as I am not smart enough to beat the market but a little part of me is telling me maybe I am smart enough and just maybe I could pick that stock that makes me a fortune.
So far, I’ve resisted listening to that small part of me!
Here’s a biggie, as I still unfortunately have a couple hangover stocks from my active days, I still check the stock market every other day or so just in case these duds have got to the point where I feel I can sell – I should just get rid of them I know.
I’m mainly in passive funds,but one day against the advise of John W Bogle, I did the opposite of his ‘Don’t Do Something Stand There’ advice.
I went and bought a chunk of Rio Tinto days before its price plummeted !!
I have learned my lesson, and now just buy boring FTSE and Developed World Index Funds.
I like the idea of the confessional, but weren’t you talking about adding a forum to your website?
OK, this is fun.
I still check my stock & fund prices every week, sometimes every day. I know this is insane and a waste of time but I still do it. Its no fun either as the pain felt when they’ve fallen greatly outweighs the pleasure when they have risen.
One day, when I am grown up, I will only check quarterly.
I own VCTs, quite a lot of them
I didn’t want to at first….I knew the charges were high and the long term performance record mediocre….but the tax benefits…..
….they just kept winking at me…. “I can show you a good (tax free) time, darling”….but I swore blind I would never do it again…..but I was back again again kerb crawing around the discount brokers’ prospectuses at the end of the next tax year…really I know its going to happen come Valentine’s day next year…..
Well where to start, spread betting, buying shares in Desire Petroleum because you know there’s a huge amount of oil around the Falkland Islands, spread betting, a years subscription to Fuller Money, technical analysis, spread betting, shorting 30 year treasury bonds because the thirty year bull market is over and has been for the past 10 years, spread betting, buying shares in Antony Bolton’s China IT because Bolton is a genius and China’s going to be the next superpower, spread betting, following The Naked Trader aka Robbie Burns because he’s got a website where you can see all the money he’s made from trading, oh yes spread betting. I’ve still got my Berkshire Hathaway shares.
It’s a wonder I’ve got anything left to put in passive index funds.
I’ve bought a Russia ETF/ Sometimes, when you look at your fellow passengers on the train you know you really shouldn’t be riding this railroad The bad attitude of Mr Putin, the deep psychological problems that mean he’s threatened by Conchita Wurst, what happened to LTCM, the questionable meaning of the term ownership, the litany of woe goes one. And yet that enticing PE… No good will probably come of it but it had to happen in the end
i know passive is the safest way to go but i REALLY LIKE the HYP stratergy. so i used my premium bond money and bought 15 blue chips @£2,000 a piece, buy and hold is my stratergy. but im still gonna get a uk index tracker as well. prob FTSE all share to cover everything in uk . in my early days i bought channel tunnel shares cos my dad said theyd be good but my £1000 is now £89. !!!!
Three from me, albeit a few years ago now:
– Thinking I had “superior knowledge” and so started trading rather than investing mechanically. Turns out I was the greater fool and so lost on that one.
– Bought into a 2x ETC without understanding contango and backwardation. Lost on that one also.
– Didn’t appreciate the damage expenses could do to ones portfolio. Again, lost on that one.
Cash. We have too much in cash. And it yields no more than 5%. Still, better than bonds, eh?
The last really high return investment we made was a silver ETF. Does that make us silver bugs?
I lost about £15k on a rather speculative property investment overseas, hold a large amount in one of the dodgy banks (admittedly through work share schemes, so they are in profit), and am playing with peer to peer lending because it’s fun. In my defense the last one is a very small amount of the portfolio, but it is still clearly an unprofitable use of my time as I make a few pounds a day tops.
It’s a good thing I have a half decent job or I’d be in deep brown stuff by now…
1. tracking the career of a top-performing geologist I know and buying shares in the AIM-listed oil co’s he works for.
2. buying the same shares as Warren Buffet.
3. buying Japan after Fukushima instead of donating to the relief fund
I’m mainly in index trackers but also a fair whack in HL Wealth 150 active funds which, overall, have done well. Better than the trackers (so far!). My confession is putting £2k into Invista European Real Estate Trust (IERE) a few years back. My £2k is now worth about £30 and was £15 a couple of months ago. I know I should sell and forget it but as the share price is under 15% of NAV I’m hoping it will recover a bit more before I sell. There’s little left to lose.
I’m similar to MrBeethoven, in that I have invested a lot in HL’s Weath 150 active funds, with only some in index trackers but I am slowly seeing the light and changing. Although I may end up keeping a couple of the active funds, just to be different from the crowd.
I have been investing for a little over a year and check my fund prices pretty much every day, – I just can’t help myself!
I bought 133 shares in AZN on Friday. I should have stuck with my LS100 account. It won happen again. Promise.
I’m invested in a Russian Fund, and a ‘Fracking’ company.
Feeling very guilty. Might have sell to sleep at night 🙁
Sov
http://www.break50.com
“Invested” on an airline companies that I was sure would be well. Like you I used to read the prospectus as well. Now I follow a few trusted advisors who have the ability to see through the smoke.
I bought some bitcoins.
It seems like a lot of irrational exuberance but I can’t quite bring myself to sell.
Also I check my broker’s website every day.
My confession is I’ve a track record of memorable investments …
– Equitable life
– Split capital investment trusts
– Marconi (and other dot-com adventures)
– Lloyds (over-weight up to the announcement of the HBOS fiasco)
– Asian Citrus Fruits (bad weather & falling market for two seasons)
Would anyone like to hire me to advise them on investment decisions? I’ve very reasonable rates, and after all that I need the money!
> The father of Modern Portfolio Theory once admitted he merely split his wealth 50:50 between stocks and bonds rather than computing his own efficient frontier
I recall that he claimed to have done this to minimize future regret. Efficient frontier has nothing to do with minimizing regret, so it would not be appropriate to apply it for this purpose – no self-sabotage there.
For my humble self, I have been trying to market time my (reasonably regular) contributions to several index-tracking ETFs instead of being obvious to the current price. I am also over-invested in BTL: I know that I should be moving out of it sooner rather than later, but the dirt-cheap gearing through a legacy Mortgage Express tracker deal is just too hard to forego, especially when there is still plenty of accumulated loss left to offset the rental income against…
i *am* the dirty laundry buried at the bottom of the closet 🙂 …
also, my ISA/unwrapped portfolio is still mostly in individual shares. i have lots of good excuses for this …
i tried to scare myself into switching into trackers by calculating whether i’d have done better or worse by putting the same amounts of cash, at the same times, into the FTSE all share index instead. i was slightly ahead of the all share index, but by such a small margin that it was clearly luck. (but perhaps i’m getting better! …)
i have at least been putting an increasingly large percentage of my investments into ex-UK trackers, to complement my individual UK shares.
i’ve read some posts on the bogleheads forum about the possibility of passive investing in individual shares. the theory is that you don’t try to pick winners, but just aim for good sector diversification, and only sell a share for reasons of tax efficiency. my average holding periods are already so long that i wonder if i could approach this.
however, another of my motivations for holding individual shares is so that i can exclude some companies for ethical reasons. (though i don’t seek to invest in companies who i consider are doing outstandingly good things – i think that’s more liable to go wrong.)
perhaps my SIPP, which contains no individual shares, can redeem me. or is it blighted by including a few investment trusts (yes, it’s aberforth smaller companies, again! i blame TI and TA. its ticker – ASL – even sounds like a mating call).
I have 30% of my liquid assets in cash. I like the security (I know, I know… inflation, bank risk…).
I keep promisining Mrs Dog that I am building a passively-based portfolio that will be left alone to do its thing. But after six and a half years at it, I currently only have a single tracker… And about forty individual shares and a dozen funds. But then, investing is a longterm game. By which I mean it seems to be taking me a really long time to do what I should have done in the first place: switch to passive and leave it alone.
Many months ago, I made a tidy 10% in a few days on a punt on the TVIX. Convinced of my predictive powers I ploughed a sizeable chunk of my SIPP straight back in.
The TVIX duly plunged 80% wiping out almost all gains from my sensible investments.
It remains in my portfolio as a reminder not to gamble again, at least, not until I’m on to a sure thing…
1. Buying active funds based on past performance.
2. Buying a technology fund just before the dot-com crash.
3. Investing in individual shares.
4. Trying to time the market.
5. Failing to diversify outside of the uk.
6. Failing to realise the importance of bonds.
Bought £3000 worth of ETF Securities Natural Gas.
Sold at 95% loss after finally understanding what contango is.
Spending the first 30 years of my life putting off starting to invest, because I was afraid of ‘losing all my money’.
Getting excited with the gains late 2012 / early 2013, and ploughing extra money in to the market, that really should have been there in the first place.
I note that there is no word limit for comments and this is probably a good thing.
1. Shorting the yen I took 500 EUR to 15k. I then subsequently lost it all.
2. After purchasing Murphy, I tried my hand at day trading. Lost a couple of grand on that game.
3. I check one of my accounts a least 5 times a day. Its performance is substantially lower than the account which I check once a week.
4. Thinking that my Japanese was good enough to navigate the JP equity market. Even in English it is difficult enough.
5. In 2013, adding to winning positions and averaging up. A few of those positions are now underwater.
Bought shares in Northern Rock weeks before they were nationalised and lost the lot.
Invested in Japan and the Far East as they should be doing well, but they’re the worst performers in my entire portfolio.
Timing the market not only buying shares but also my index trackers, although this has worked out for me reasonably well 🙂
Bought into the FTSE 250 at the end of last year, just as it reached the top, down more than I care to think about on that
I also check my share price every day, although my resolve is still strong and I’ve not sold on the falls, but I have bought so on the drops but again this is doing ok for me 🙂
Computer driven trading…. not what you think but…
Tinkering with my finance spreadsheet is my distraction from tinkering with my portfolio. I once sold a commodities ETF because I couldn’t reliably “scrape” its price from Morningstar into my spreadsheet. I justified it at the time because the replacement ETF had the same TER and better liquidity…
£23 trading fees on a vanity!
These are great — thanks for sharing everyone.
My very first equity investment was a mistake: LastMinute.com in the dotcom boom at the end of the 1990s! My initial £1,000 pre-IPO subscription was scaled back to about £350 from memory. I recall I lost money but it was more confession-worthy because of the bad reasons I had for investing in it (fear/annoyance of missing out on the dotcom boom, ignorance, falling for media hype).
That said I wonder what LastMinute would have been worth if it had survived as a listed company today?
In recent times my biggest problem is an age-old one for active investors — getting drawn to falling knives. I’ve instigated some K.I.S.S. rules to try to stop this semi-regularly whittling down of my returns, including time delays and position size limits. But it’s definitely an investing sin my soul is weak for! 😉
This seems more like ‘active investing anonymous’.
@TI
I can tell you exactly what the lastminute.com shares are worth today
£35
I too had a dabble in the what was possibly the last IPO of the 1st dotcom boom. I then subsequently lost the share certificate and forgot all about it until about a month ago. For reasons I know not it came back to me in a dream that I owned it. After a bit of internet digging I found out that the company had been sold and all the shareholders received a set valuation on their shares for their troubles. I think this happened back in the mid-naughties. So I got in touch with equiniti who managed the whole affair and managed to find myself in their database. I was then sent a cheque, which minus admin came to the princely sum of £35.
I couldn’t believe my luck! The best £35 I ever earned..
@Rhino — Hah, that’s great! 😉 Yes, I flogged mine off either on or just before the acquisition. I was thinking more if it had remained a standalone company and kept growing as such. If you look at other dotcom survivors like Amazon, eBay, Priceline etc they’ve actually rewarded some extremely inflated expectations. Of course there’s no guaranteeing LastMinute.com would have survived if it hadn’t been acquired, and I can’t at all remember the state of its finances or its burn rate, to the extent that I knew about such things back then.
Oh yeah almost forgot, bought a stash of gold sovereigns because we have a fiat currency system and all this money printing is bound to lead to Wiemar style hyperinflation, especially now that I know we have a fiat currency system, and have done for longer than I’ve been alive.
I’d buy gold sovs if only the local banks hadn’t shut their safety deposits. Where do you store ’em, Robert?
My “fun” active portfolio is, in my mind, tiny, but in practice my spreadsheet tells me it is somehow more than a third of my portfolio.
I don’t hold any bonds and have convinced myself that:
(a) Psychologically, I can resist the urge to bail when equities crash (I didn’t sell in 2007-9), and
(b) my holdings in things like Troy Trojan, Newton Real Return, Std Life GARS perform a volatility dampening role similar to bonds (which is partly true because they do own bonds).
I’m way, way over the FSCS limits with II. I know I should spread my risk by using other platforms, but after several years of honing my platform fees as low as possible, I can’t yet bring myself to pay more.
I check my portfolio every day.
and I have been hunting morning star for a Russian ETF/tracker fund…
I am underweight bonds… in a portfolio that should be split 80/20.
I’m new to this, I started off just over a year a go. Set up my account on 5th April and my first monthly payment went out on the 20th May.
M&G Global Dividend and Newton Global Higher Income. Then on the 31st of May I switched to HSBC All Share tracker and their UK Gilt, after reading this website and a number of others inc Bogle heads. And now I’m diversified all over the world with index trackers. Lovely.
And of course as most people I check my portfolio more than I should. And then when I see its gone down a bit I just remind myself that this is a patient game, smile and close the tab. 🙂
@Grand HRUB, XMRC. But you know you really shouldn’t 😉
Bought Alpha Pyrenees Property investing in French and Spanish Warehouses in 2007 (oh Raven Russia beware thyself..) – bought some more for the dividend yield of 10% in 2008…… finally sold them for a 95% loss before dividends and only 70% loss after dividends…..( I know I should correct for risk free rate but hey this is when we kid ourselves..)
1. Equitable life (but at least 90% in funds).
2. Santander shares £10-£5 in the blink of an eye…we’ll I wasn’t watching!
3. Fidelity China with Tony… then selling out just before it recovers..doh!
4. Coming to passive investing a little late in the day and very slow to readjust portfolio, why ETF’s…?
Wearing out a keyboard, pressing F5 to refresh fund calculation….
I don’t count Equitable Life as a guilty secret. AFAIK, there was no obvious reason not to take out a policy with them, as they were widely considered to be the best in the business and this was based on decades of solid performance.
I never really liked the with profits concept and I only bought funds, but this was only gut instinct. I can’t blame anyone for going for an Eq Life with-profits pension.
I sold my units in Neil Woodford’s High Income fund in 1999 to invest in shares. I have no idea whether I’m better off!
Ah bless you sinners, that was highly enjoyable.
I sentence you all to three Our Famas and two Hail Bogles.
i’ve not made a mistake yet. I graduated five years ago and started investing and everything has doubled.
I used to do ZOPA if that counts.
Recently I bought a leveraged (2x) Biotech ETF when the price was rising quickly, couple of days after the bubble burst and sold it with -20% (panicking). Now is -40%, still lucky! Same with another leveraged ETF (coffee) – 20% in 1 week. Never again.
Thank you ivanopinion I feel absolved of my Equitable life guilt.
But I need to own up to 2 more cases of VCT/EIS madness and losses of £15-20k after tax loss adjustment…
Like someone else above mentioned, I just can’t resist the P/E ratio on Russia. I already held the JP Morgan Russia fund before the crisis over there and have been topping up on it every time it has dropped. Strangely enough it’s on the way up at the moment!!
@spacebadger
Can’t offer absolution on that one!
hey hey I want a piece of this russian fun
does anyone know of a micex tracker OEIC? That would be ideal..
Hi Rhino,
It’s not a tracker but I invested in “Neptune Russia & Greater Russia” fund.
This is not a recommendation though -do your own research etc. etc.
Cheers
I hear very loud voices at every corner saying “timing the market” to enter/top up is a mug’s game. I hear it; I understand it BUT just can not help myself!
I have many “actively managed” funds which I am slowly converting to passive now as I approach retirement. However, my obsession with trying to time exits from actives and buying passives is making this a painfully slow transition.
I know I should just bite the bullet and make the jump in one go. I am getting better though, slowly but surely 😉
@ Nick, ah contango…….
I had £9k in leveraged (2x) natural gas etf, Doh!
& i work in commodities!!
is contango anything to do with fandango?
I’ve never wanted to type LOL before but that brought me close!
“is contango anything to do with fandango?”
I can only answer: Bismillah, NO!
@sov, ermine thanks for the russia fund/etf tip-offs – very handy. I particularly like that hsbc etf
I save all the confessional type behaviour for the kids ctf/junior isas, i.e. use them like a release valve for the stuff I fancy doing but know is stupid. I think they may be seeing some russian exposure in the not too distant future..
This probably reflects badly on my character, pushing the risk on to some very small shoulders..
@ the Accumulator
My inferiority complex is getting worse. I want to believe your ‘LOL’ was aimed at Rhino’s comment (re fandango) but can’t help feeling it was aimed at my stupid ‘it can’t get any lower’ moment…..
infamy, infamy they’ve all got it in for me!!
I am considering purchasing a few units in the Woodford fun on Monday! Pay day and all, it’s all about some Russian Pie and a punt on Mr Woodford.
Grand
I bought BTG when I meant to buy BT via my online broker. I didn’t even notice the error for ages
Historic:
1. First ventured into unit trusts in July 1987, Japan, Finance & Property, and European funds. Enjoyed a 30% plus drop in value within 3 months. After a couple of years sold all 3 at a small loss.
2. Selling my holding in Fidelity European in the 1990s because it had done so well!
3. Way back in 1986, being talked into buying an insurance bond without being told that the returns were always worse than the equivalent unit trust because of the tax regime. Didn’t lose money versus building society savings alternative but it still rankles.
Current:
1. Still check ISA value almost daily!
2. Still with Bestinvest despite high charges because of hassle of switching and fear of moving to a platform with a poor web interface. However, with my size of portfolio and the number of sell transactions I’ve made over the last few months , the savings from a move would be pretty small.
3. Not venturing into ETFs because I can’t find UK-domiciled physical replication equivalents to current holdings.
4. Late to get into investment trusts
5. Still hold active funds which have out-performed their benchmark indices for years.
6. Spend too much time reading personal finance blogs!
Gosh, where to start…. I’ve got quite a lot to confess!
1. Despite the fact that I know and understand the arguments for using trackers, I am 100% invested in actively-managed funds. To be fair to me they are all investment trusts, which many passive investing fans see as the acceptable face of active management, and I tend to invest in areas which are arguably more suited to active management.
2. Like most other people commenting, I check my investments far too regularly — ISA almost daily, SIPP at least once a week. I am about 30 years away from my likely minimum SIPP access age so that one is especially crazy. I don’t know why I do it as I have no interest in attempting to trade — I suppose I’m just curious and it’s always mildly exciting if a dividend has shown up in my account.
3. Although most people would agree that it’s a good strategy to invest in areas which are cheap, I take this to extremes and I exclusively invest in sectors / regions which have recently suffered a catastrophic slump. While I maintain that this ultra-contrarian strategy will probably serve me well in the long term, I imagine it still offends investing orthodoxy.
4. The end result of point no 3 is that I now have ISA and SIPP portfolios which by standard measures would be considered wildly risky (although given how cheaply-priced the investment trusts were at my entry points, my view is that the only way is up).
5. I use Hargreaves Lansdown for my SIPP despite the fact that it’s not the cheapest — although to be fair as I invest exclusively in investment trusts its fees are by no means the worst either, and I regularly do mildly complicated transfers where I am grateful for their efficient customer service.
6. I’m invested 100% in equities with minimal reserves in cash. Given, however, that I have few fixed financial commitments (no children and I rent my flat) and a very steady job, and that I take a long-term view and a rational attitude towards risk, I don’t think there’s anything wrong with that, but again I imagine it’d offend orthodox views of personal finance.
OK – I was part of an investment club up to the dot com crash. You can imagine……
On the plus side I enjoyed the socials, on the downside putting the small subscription in to my mortgage would have been better
And an AVC with Equitable Life could have been more….profitable.
Investing in Edinburgh New Dragon Investment Trust (what? I hear you say…) taught me well but on the flip side Henderson Far East Income did rather Ok until recently.
Now I’m into the NZX and Australian Stock Market as being tax efficient given my change in location!
Ok, wussed out and sold for a £6 profit altogether. Money back into LS100.
Won’t happen again. Sorry about that.