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Enter The Accumulator’s confession booth

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

Investor's confession time

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

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{ 65 comments… add one }
  • 51 The Rhino May 29, 2014, 9:51 am

    hey hey I want a piece of this russian fun

    does anyone know of a micex tracker OEIC? That would be ideal..

  • 52 Sov May 29, 2014, 11:15 am

    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

  • 53 Kean May 29, 2014, 12:12 pm

    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 😉

  • 54 Harry May 29, 2014, 3:16 pm

    @ Nick, ah contango…….

    I had £9k in leveraged (2x) natural gas etf, Doh!

    & i work in commodities!!

  • 55 The Rhino May 30, 2014, 9:26 am

    is contango anything to do with fandango?

  • 56 The Accumulator May 30, 2014, 9:49 am

    I’ve never wanted to type LOL before but that brought me close!

  • 57 ivanopinion May 30, 2014, 10:52 am

    “is contango anything to do with fandango?”

    I can only answer: Bismillah, NO!

  • 58 The Rhino May 30, 2014, 11:49 am

    @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..

  • 59 Harry May 30, 2014, 1:27 pm

    @ 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!!

  • 60 Grand May 30, 2014, 5:35 pm

    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

  • 61 Nibster May 30, 2014, 5:56 pm

    I bought BTG when I meant to buy BT via my online broker. I didn’t even notice the error for ages

  • 62 Grumpy Old Paul May 31, 2014, 9:42 am

    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!

  • 63 Alex May 31, 2014, 10:52 am

    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.

  • 64 britinkiwi June 1, 2014, 1:14 pm

    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!

  • 65 Belfast June 2, 2014, 1:17 pm

    Ok, wussed out and sold for a £6 profit altogether. Money back into LS100.
    Won’t happen again. Sorry about that.

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