Portfolio Update: Magic Formula

A huge portfolio update this month! All the changes happened at the end of the month and to top it off I’ll be going on a two week holiday (already on it!). In the last rant I detailed changes to my investment policy and revealed that I will now be adopting the magic formula by Joel Greenblatt. With that I’m changing the format of these portfolio updates slightly. I will be removing the equity returns since inception graph since I don’t think it is particular useful. Also I will be shortening these posts focusing mainly on providing the numbers.

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New Investment Policy

I have done a lot of thinking about a new investment policy lately. I recently ranted about my current investment policy and the biggest issue was how time intensive it was. Ever since then I have been wondering whether I wanted to devote a large portion of my time into potentially achieving better than average results. Maybe I should stop dreaming. The other problem though is that I enjoy understanding and analysing businesses but by the same token I have a ton of other things I’m interested in! So I have decided…

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Thoughts on Investment Policy

In the last two monthly portfolio updates, I highlighted that I have been rethinking my investment policy i.e. my approach to managing my investment portfolio. With my CFA exams out of the way I had some more time to think about my current approach. I still haven’t got a definitive answer of how I want to approach my investment portfolio but maybe starting with a recap might help.

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FX Risk and Foreign Investments

Investing in foreign assets can be tricky business. Not only is it unfamiliar but you subject yourself to the vicissitudes of exchange rates. The potential of loss from your investment as a result in changes in exchanges rates is commonly called FX risk. I would call myself an Australian investor who has a significant allocation of my investment portfolio in U.S. dollars.

The FX market has not been kind to me lately seeing as the Australian dollar has strengthened over the last couple of months.
AUDUSD

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Portfolio Update: Brexit

Brexit!!! Everyone has been talking about it and there is some very interesting developments happening around that part of the world but for those in Asia, Australian and the U.S., what is the real impact to regular people like you and me? Not much is my guess.

The Brexit decision took the financial markets by surprise and saw the equity prices around the world enter free fall. For those of us in Asia, we had our eyes glued to the screen as the votes came in and it become clear that the people of the UK had voted to exit the EU.

Below is a graph of how my portfolio, U.S. S&P500 and ASX200 total return index perform after the Brexit decision on the 24th June 2016.

Brexit

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Portfolio Update: The Poisoned Apple

This has been a very quiet month on the activity front but as usual the portfolio travels along with some significant volatility in Western Digital and Apple. I have been busy spending time on other things and thus my portfolio has taken a back seat. With the upcoming CFA exams next month plus work and other personal items on the agenda, I suspect May will also be a quiet month.

My lack of time and to be honest, lack of interest in spending a large portion of my time performing the research required to initiate new positions (on top of monitoring existing positions) has got me thinking of how to change the investment process to better align with my goals and available free time. More on that in the coming months, the current focus is to survive the upcoming CFA exams.

Sadly that also means no rant this month. Sorry.

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Portfolio Update: Goodbye GoPro

This month was a busy one where there was some renewed energy in searching for investment bargains to add to my investment portfolio and to control the cash build up occurring monthly. It also saw sales of some of my investments namely GoPro and Horizon (HZN).

As I noted in previous portfolio updates, even with the market in correction territory I was not discovering many bargains on the street. This month I was surprised to find a few lying around even though the market started to regain its losses this month.

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Wealth Formula

Last month I ranted about assessing whether you are ready to invest? I also highlighted the very simple guaranteed formula for wealth creation spend less than you earn. Being the math geek that I am, I enjoy breaking down things even further. So taking the concept of spending less than you earn, I came up with the following rather intimidating formula.

WealthFormula

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