"Success is not final, failure is not fatal, it's the courage to continue that counts" (Winston Churchill)
The first month of 2018 has continued in the positive manner of 2017, with a stellar month especially in the US. Regardless of other effects Donald's stewardship has, having a businessman in the White House so far has been good for the economy.
One thing is for sure though Donald will be the first to tell you that it was down to his decisions why the US markets are experiencing such tremendous growth, growth I believe is here to stay
The FTSE was the only laggard, mostly due to the ever strengthening pound given the revenues of many of the top index earners are in other currencies, anyhow the data for the month..
On the currencies, the USD continued to weaken, again something Donald has wanted to stimulate exports and no doubt he won’t be shy in taking the credit. The Pound is finally back in the $1.40 range, a rate that looks recognisable post Brexit and the Euro also continues to gain strength…so the greenback fell as follows:
Successful investing in the markets can be summed up in two words "asset allocation". Knowing when to take a profit is important but as someone who is focused on long term capital growth, to coin the Warren Buffet phrase its "Time in not Timing", and whenever profit is taken it has to be reinvested somewhere.
Regular readers will know that two of my favourite managers are Terry Smith of Fundmith and Nick Train of Lindsell Train. In 2015 it made the news when Nick Train bought his first stock for the fund in four years. Some may argue that is lazy management, after all he is taking a fee to buy & sell the right companies.
The fund though was one of the best performing (and it continues to be) so the investors are getting a good return on their investment, which after all is the name of the game.
Nick, Terry, Warren's philosophies about doing the proper research and analysis so you end up buying quality companies and trusting them to give you the return is a tried and tested way to make money.
Of course no one is going to get it right all of the time and whenever you realise that you have made an error, you do need to be brave enough to fix it. Selling at a loss is one of the most difficult things to do, especially if the markets are going up.
Our job like the fund managers is to position clients in the right areas. Its all about making the right choices, the correct decisions.
One of the stories of January was the reverse takeover by Keurig Green Mountain of drinks firm Dr Pepper Snapple. During the day at one point the shares were up over 40%. Both Fundsmith and Lindsell Train had relatively high exposure to this company at 3.8% and 1.8% weightings respectively.
Investors in these funds benefitted from the manager's good choices. We all make good choices but as Ken Basin pictured above, who got all the way to the million dollar question only to get it wrong, will attest to ...some times we also make bad ones.....