What caught my eye this week.
I love this time of year. No, of course not the short, dark, dreary days. I spent a lot of my childhood in sunnier climes and the Seasonally Affected Depression is real.
But rather the sense of nothing pressing to do.
Granted this is a privilege, albeit the result of my choices.
I deliberately don’t have kids dragging me all over the place. I’ve literally made it my business not to have a stressful work life. I’m very grateful for my wider family life, but once Christmas is over it’s a week of limbo and I relish it.
There are pros and cons to this rather ascetic way of living, certainly. I can see for some it might appear a bit barren.
But it suits my unusual temperament, and importantly it isn’t hurting anyone.
Winter wonderland
That said, I have developed some seasonal routines.
For example I tend to do a bit of midwinter purging of junk and clutter. And while I don’t commit to strict New Year resolutions, I do try to think a little more about what I might do better next year.
Currently I’m minded to eat meat only twice a week, work harder to see farther-flung friends, and hunt for more ultra long-term holds for my portfolio.
We’ll see.
On the purging of junk front, I also love resetting my massive investing spreadsheet.
My sheet starts with ‘my number’ at the top of the top sheet. That’s driven by various sub-sheets that calculate the shifting value of my portfolio in real-time. These also remind me where all the skeletons are hidden what is on which platform, and throws out interesting statistics about my shifting exposures and returns.
Zeroing it all ready for a new year is for me a special kind of slightly Rain man-y pleasure.
I see some of you are scoffing at the back?
Yes of course a year is an arbitrary orbit of the sun. Indeed, neither the world nor the markets are magically transformed on 1 January. (Although in retrospect 2022 sure looks that way.) I agree it’s all mental accounting and biases.
But hey, I’m a (mental) human and I am biased. And I can’t wait to delete the negative numbers and reset the counters.
Beans, beans, they’re good for your heart
Many years ago I met the best-selling author Robbie Burns of Naked Trader fame. We talked about investing.
Robbie was dismayed about my Buffett-y habit of averaging down on my losers:
“Why would you want to stare at your failed trades all day? It’s depressing. I get rid of them.”
I thought Burns’ advice was ridiculous at the time. But now I think it’s more wise than not.
Sometimes you have to learn a lot of complexity to realize some simple truths.
In 2023 I’ll feel happier about my active investing – and I suspect I’ll do better accordingly – because I (hopefully) won’t have to keep seeing (and reacting to) how I’m lagging the market year-to-date over an arbitrary time period in a portfolio that can’t sensibly be said to be winning or losing over anything less than at least five years, at least not without luck looming large.
Agreed: this is intensely stupid. But it’s hard won self-awareness too.
I’ll be working on that flaw in 2023, as I cook my beans instead of a pork chop and try yet again to tie down some much busier friend for a weekend away.
Maybe you’re a sensible passive investor and you already have more time to devote to the most important things in your life?
Regardless: what will you be doing more or less of, investing or otherwise?
Let us know in the comments below. And happy new year!
Ten of the best from Monevator in 2022
A semi-random selection of some of my favourite posts of the past year, with a bias towards the older and more likely to be forgotten ones…
How do zero commission brokers make money? – Monevator
Paying for care in the UK [Six parts, links at top] – Monevator
How to spend money – Monevator
The rising cost of living: how to maintain your quality of life – Monevator
Passive investing: what is it and how does it work? – Monevator
Quantitative tightening and you – Monevator
FIRE update: one-year anniversary – Monevator
Mortgage risk: a checklist – Monevator
Fixing your financial posture – Monevator
Don’t currency hedge your equity portfolio – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
Stock and bond markets shed more than $30tn in ‘brutal’ 2022 [Search result] – FT
UK houses prices down for fourth month in a row; longest run since 2008 – Guardian
New Year’s Eve parties hit by strikes and cost of living – BBC
MBE for Gymshark founder who launched £1.25bn empire in parent’s garage – Guardian
Workers over 50 encouraged to end early retirement – BBC
Government extends Mortgage Guarantee Scheme to end of December 2023 – GOV.UK
Liz Truss regime’s ‘moron premium’ still looms over UK economy [Search result] – FT
Products and services
Barclays: two Best Buy cash ISAs paying 4.1% (two year) and 4% (one year) – This Is Money
Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor
UK banks to ease pressure on mortgage holders as late payments set to surge [Search result] – FT
How to save money in the sales – Which
Hate that jumper? Here’s what to do with unwanted Christmas presents – Guardian
What are your rights if your flight is cancelled? – Which
Andy’s money-saving Deals of the Week – Be Clever With Your Cash
The best dream homes for sale, in pictures – Guardian
Comment and opinion
Needs, wants, and why we always feel unfulfilled – Pragmatic Capitalism
Taking it personally – Humble Dollar
At 90, Burton Malkiel of Random Walk… fame still sings the same tune – Think Advisor
Contrast – Indeedably
What is horizon risk, and why does it matter to you? – Rock Wealth
Same old same old – Humble Dollar
Build a buffer into your retirement plan – Random Roger
Investing basics: a balanced portfolio – Vanguard UK
Money lessons from The White Lotus – A Wealth of Common Sense
(Sane) 2023 forecasting mini-special
2023 predictions – Fortunes and Frictions
Take your 2022 losses while you can – Of Dollars and Data
Naughty corner: Active antics
A deep dive into Fundsmith [Podcast] – Maynard Paton
Notes from Nick Sleep on short-term vs long-term thinking [PDF] – IGY Foundation
Workers rush to offload start-up shares as valuations plummet [Told you; search result] – FT
High returns from Turkey ETFs remind us to look at what’s been hammered [Podcast] – ETF Trends
How a CFO preps for an earnings call – The Secret CFO via Twitter
Kindle book bargains
Money: The True Story of a Made-Up Thing by Jacob Goldstein – £1.19 on Kindle
Dead in the Water: Murder and Fraud in the World’s Most Secretive Industry by Matthew Campbell and Kit Chellel – £1.29 on Kindle
Environmental factors
The Senegal man on a mission to plant five million trees – BBC
Why Alaska’s Beluga whale populations are dwindling – Hakai
Army of islanders to protect gecko the size of a paperclip – BBC
Off our beat
Thinking tools to improve your life – Neckar’s Minds and Markets
Three years on, what most surprised experts about the Covid pandemic – Stat
Let’s agree and accept that life and success is not fair – Freddie deBoer
Ukraine unplugged – The Atlantic via MSN
ChatGPT robs you of the benefit of thinking – Young Money
The surprisingly profound power of Thank You notes – The Atlantic via MSN
Scientists are arguing about publishing alternatives to peer review – Experimental History
All success is a lagging indicator – Ryan Holiday
And finally…
“A cheap index fund is basically investing in its purest form. There’s no fat or indulgence. This is why it will likely never go out of style.”
– Eric Balchunas, The Bogle Effect
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I’ve actually been busy this inbetweeny period sorting out ISAs, re-investing some dividends from the last quarter, finishing spreadsheets for 2022 and plotting for 2023.
I managed a 5.5% total return for 2022 – mostly from dividends. Despite being below inflation I’m well happy with that, all things considered.
For 2023 I will be ploughing any new money from pension contributions or dividend cash into bonds, mostly investment grade corporate and some high yield.
The risk/reward for them is looking so much better now relative to equities, although credit spreads could still blow up I guess. In which case I’d just buy more, as planning to increase my asset allocation to them anyway over the next few years.
Happy Twixtmas, TI.
I too do quite a bit of financial/investment admin during this period. Hooray for the 31st being a Saturday – it allows a more leisurely snapshot process than when the end of a month/year/decade is mid trading week.
I smiled at your description of your spreadsheet. I have gone so far as to put the top row, with ‘my number’ on it (and GBP:USD, and a status check of HL’s pricing feeds to avoid heart attacks) on all of my key tabs. Let’s embrace those cognitive biases, eh. But I don’t have a reset process at the start of the next solar orbit. Instead, my process involves snapshotting various things once a month.
And your point about the wisdom of a trading approach to cutting losses, rather than Buffet-y averaging down, resonates with me too. 2022 was certainly a year that averaging down didn’t work very well! My holdings in SHOP are only too good a testimony. Thankfully I have resisted too much averaging down of AMZN.
I haven’t worked out what my 2023 resolutions are yet but they will likely include:
– continuing to pay down my margin loans
– continuing to max out my ISAs
– accelerating / increasing my contributions to Mrs FvL’s pension, which hasn’t increased (beyond inflation) for 10+ years and needs to
– more controversially, starting the delicate conversation at work about My Next Move
– finding an additional form of exercise to do
I reread the papers a pension scheme has sent me and among all the planning tools and risk warnings etc I couldn’t find the section on where to apply to start drawdown.
Usually a dangerous time of the year for me as tend to look for next year’s stocks pups around now. However, this year is different , I intend to transfer some of my cash ISA into Ruffer and the rest into a nice bond fund, if I could just decide on which one. Start part time next week and then if pensions creeps back up a few %, retired for summer. We shall see.
I suspect that unlike the majority here, plus the generational thing, my spreadsheet is a bear bones record of it’s changing values taken once or twice a month. Although I now “audit” every quarter thanks to Monevator. One of my two active funds being SMT, plus the bonds in the 60/40 portion have provided a bigger drawdown than 2009, admittedly the PF wasn’t as big then. But because we are continually advised/encouraged to buy and make the most of the new values for the long term, which of course is correct, very little if anything is written or advised for the short term. In fact my short term is so short, I can see the black at the end of the tunnel.
@ MV ref your resolve to eat meat just twice a week. Having given up meat 35 years ago, for the past 3 years Iv’e tried to encourage my wife to treat herself to a decent joint, occasional steak, etc as opposed to her usual chicken portion.
Following 2 fractures to her pelvis last September, plus another one 7 weeks later, courtesy of an uninformed over zealous physio, I added meat to my cooking skills to ensure that she gets proper bone building nourishment thats possibly lacking in her usual fare, and to save time shopping, prepping, and cooking, I shared her meat every day diet. Although I draw the line at sausages and cooked chicken legs.
But, in two months time when she is hopefully fully recovered, complete with hairy chest, I shall suffer cold turkey giving up sirloin steak, liver bacon and onions, and Sunday roast.
It was a great year for accumulators. Specifically those from USA.
@Peter — Yes, one of the tensions of this blog is that for different people a market decline represents different things. For those <40/50 and/or not pursuing FIRE then it was a gift to get away from those high multiples of 2021.
I aspire to have it both ways with my active investing (never *entirely* succeeding, but ideally doing better in down years usually and perhaps lagging a little at the peaks) but that is a quixotic mission that isn't and shouldn't be relevant to most readers (see my membership wall aspirations from last weekend reading).
Thanks for the reminder here. I really must make more effort to remember this, it was a drum I used to beat a lot in the first 10 years of the blog and it's why I'd love to find a young Investor/Accumulator to add to the stable, albeit we just can't get exactly the right fit.
Must try harder to flag both sides. 🙂 Bear markets were a gift to me twice on the way to here, and indeed hopefully this one will look that way again in the medium term once more.
I do an audit too at this time of the year, of total net wealth. It’s nominally down on this time last year and, given inflation, in real terms it’s down just over 12.5% – not yet bad enough to force me back to work, but still dispiriting.
It’s always refreshing to take a break and have a bit of downtime, especially after the busy holiday season. It’s also a great opportunity to reset and reflect on the past year and think about what we want to focus on in the new year. It sounds like you have developed some seasonal routines, such as purging clutter and resetting their investing spreadsheet, which can be a therapeutic and productive way to start the year.
I also appreciate your self-awareness about the arbitrary nature of the new year and the tendency to engage in mental accounting. It’s important to remember that a year is just an arbitrary orbit of the sun and the markets don’t magically transform on 1st January. It’s also important to keep a long-term perspective when it comes to investing, as short-term fluctuations should not be the sole focus.
I also liked the suggestion to try to do better in the new year by eating meat only twice a week and making more of an effort to see far-flung friends. It’s easy to get caught up in the day-to-day and neglect our personal relationships and health. Setting small, achievable goals can be a great way to make positive changes in our lives.
Overall, it’s great to hear that you are taking some time to reflect and make positive changes in the new year. Here’s to a happy and productive 2023!
I’m passive with a home bias and small cap tilt so down a lot. Still below 3 years ago despite managing to invest an additional 20% of the starting capital sum over that period. I’ll keep adding as much as I can regularly, will delay thoughts of early retirement and will count my blessings that my work is flexible(ish) and still fairly enjoyable. It’s scary though and requires serious discipline. Will be much harder in 5-6 years when (all being well) I hit drawdown I fear.
What is the rationale for linking to the Guardian’s Fantasy House Hunt week after week?
On the face of it it seems a little out of step for a website which encourages a sensible financial approach to link to something which feeds the UK obsessions with housing and wanting a little more desirable property.
Obviously property is a really important part of your reader’s financial life. I would think you should be able to find content to link to which promotes a much more sensible/realistic/practical approach though?
I fully intend to gaze at the financial belly button today. To be fair with myself, I have been putting it off this year and instead, indulging in the hedonistic pleasure of visiting newly acquired friends for new year coupled with a day in one of our favorite cities on the way back home.
New friends, like the new year, give you a chance to re-evaluate things and give you new windows to peer through. This lead me into a conversation regarding our recent retirement, and, their willingness to keep working. One, a diligent front line NHS worker who was rounding up on state pension age, maxed out on the NHS pension and very passionate about her role, the other, a high level manager overseeing a very worthy project for an NHS trust. I probed a little, it must be said, perhaps too much, but neither were ready to embrace retirement even though the means to do so were there. I understand their viewpoint a lot more now. Part of our departing conversation had them ask us the question “Don’t you ever worry about running out of money?” Answer: “We could always go back to work if things ever got that dire but we worry more about having the time to spend it while we are still fit”
I think both the question and the answer tell of the journey to our present state. It was a great thing to visit them and I hope we see much more of each other. Great people.
Onward to the belly button, step one remove the fluff and dust off the ledgers, open the S+S accounts and get a snapshot, complete the spreadsheet and put a pin in the graph. It will not be as pretty as last year but I hearten myself that after what was a bad year on the markets all round, the number is not anywhere near where we are contemplating paid employment.
I have not eaten meat, other than by accident, since my early twenties, so that can’t be a thing to give up and I intend to learn how to weld this year. Happy new year everyone.
JimJim
@SemiPassive — This was a lovely year for having an equity income fund and enjoying seeing the dividends roll in. As I’ve mentioned before, I keep an eye on a small one for my mum. It was up in 2022, with dividends, though not quite keeping pace with inflation. It reminded me while I’ll very probably set-up my affairs as an income portfolio and go for natural yield when I move towards drawdown, whatever the mathematics / my co-blogger says 😉
@Fire V London — Glad to hear you’re going to work down that margin loan further, you sounded a little overly relaxed recently, to my (paranoid perhaps!) ears. In a sense I guess our gearing our portfolios were both a product of the times. It makes less sense with rates rising, irrespective of volatility growing / bear market conditions (latter could be a reason to re-up, at least if not marked to market…?)
@BBB — Blind spot for me I’m afraid. Maybe a reader can help?
@Griff — Exciting time, good luck! All else equal I’d rather retire after a downturn then in a bubbly 2021, presuming the numbers stacked up. Hopefully a decent amount of the potential risk that was apparent in early 2022 (https://monevator.com/is-your-early-retirement-under-threat-from-an-unlucky-sequence-of-returns/) has been processed now, at least on the bond front. No certainties of course!
@Barney — I’d like to do a poll to find out how much tracking our audience does, actually. Re: meat, there are definitely substitutes for vegans/vegetarians. I was the latter for a few years a few decades ago, and as you know things have come on leaps and bounds. It is far easier when you can just chow down on chicken fajitas though 😉
@Steve — I don’t do too badly on health and fitness but I neglect friends I can’t visit within a tube ride. Must do better in 2023!
@Passive Investor — Yes, I agree, I took my feet of the income peddle a couple of years ago and while technically work is still paying the bills not having cash sloshing around to average down into the falls of 2022 was a pretty grim experience. It’s actually another advert for going part-time first, ideally through a bear market, to get a sense of how you respond to spending a shrinking portfolio. Or even just to train the muscles to get it done if one decides to push on!
@Dave — I suspect you’re in the minority. 🙂 Your points are well-taken, but that feature is always among the most popular among the Guardian articles on its own site, and one of the most-clicked here. In any event, Monevator isn’t a hair shirt pot noodles only blog. If somebody wants to do that, more power to them, but we’re a broad church. We have readers working out of debt, and one or two readers working from Docklands’ penthouses or the equivalent… Finally not all the Guardian homes are expensive, although they do tilt that way. It depends on the theme. I like the focus on character versus price in fact. Cheers!
@JimJim — Having friends that can bring a very different perspective to the table is so valuable. Even better if they’re new friends! In fact I’m thinking I should add “make at least two good new friends in 2022” to my To Do list. It’s hard when you work from home on an anonymous blog as a middle-aged bloke to make more than faint acquaintances.
@all — The year is off! Have a good one!
@TI….. I’d like to do a poll to find out how much tracking our audience does, actually.
Good idea, when do you reckon?
@Barney — Maybe I could do it for Weekend Reading. Probably two questions actually: how do you track, and how often do you check?
It’d just be for my / reader interest I suppose. Don’t think it would change anything we do blog-wise.
@TI great, looking forward to it.
Great article on the importance of sticking to our New Year’s resolutions and the strategies we can use to do so. I particularly liked the emphasis on small, incremental changes and the importance of setting specific, measurable goals. It’s easy to get caught up in the hype of a new year and make grandiose resolutions that are difficult to maintain, but by taking a step-by-step approach and focusing on building good habits, we’re much more likely to achieve our desired outcomes in the long run. Thanks for sharing these insights!