I’m pleased to announce yet another market beating month for the Shares and Stock Markets Portfolio coming in at 2.19% for February 2016.
Index returns were as follows:
- FTSE 100: 0.22%
- S&P 500: -0.42%
- Dow Jones: 0.30%
I publish these reports to show how well I’m managing investments and show what I actually invest in whether they are government bonds, businesses listed on a stock exchange or private businesses that I have a stake in.
The reports help me to track my own progress and to see what is working as well as what is not.
Individual investors have an advantage over institutional investors in that we are able to act swiftly, control costs more efficiently and have greater control over the outcome of our investments which has been one of the reasons why the portfolio is off to such a good start this year.
Let’s get into what happened in February.
What Happened In February?
Mrs Sharesandstockmarkets organised and hosted a lovely party for our eldest daughter where her and her mates got to groom and ride horses as well as eat cake and gulp lots of fizzy drinks.
The staff were amazing and really knew how to deal with loads of sugared-up toddlers and their parents.
Family time is important and Mrs Sharesandstockmarkets does a superb job of making sure that we spend time together as a family.
I understand from the Missus that there is another party organised in March so I can’t wait for that one as well.
The Family Stuff’s Okay David But What About The Numbers?
Okay okay I get it you just want to know how I beat the market again this month.
Well it’s the same reason as the last market beating month: the private business.
Regular readers of this blog will know that at the beginning of 2016 I started a private business which has been the major contributor to the positive returns enjoyed by The Shares and Stock Markets Portfolio.
I’ve been super happy that this fledgling business has had such a great start and has remained in positive cash flow territory since inception.
This has helped in the purchase of physical precious metals with an emphasis on silver.
iShares Silver Trust ETF 2 Year Chart
Silver is another great way to store value for the future
In practice what this has meant is that the business has not yet made a loss measured on a weekly and monthly basis.
Revenue has been larger than total expenditure in every week since the start of 2016.
The reasons for this happy state of affairs are that:
- The business has extremely low operating costs
- Revenue had already begun to trickle in even before the business was officially set up
I could see that there was potential for a profitable low-cost business to be set up – a client had asked me to help her out – but I’ve since found that even this positive cash flow needs careful management.
Case In Point: Managing Start-Up Growth
Recently my clients had indicated to me that the location of the service delivery was a problem for them.
My response was to spend four straight days talking to and visiting alternative locations that would be able to accommodate both my needs and the needs of my clients.
Managing Start-Up Growth Means Managing Client Expectations
The net result of those efforts meant not only a new venue but the additional benefit of a landlord who:
- lives close to the new venue
- is able to accommodate and action requests at short notice
- understands the issues faced by start-ups and small businesses because her tenants are also small businesses
- will allow me to tap into her existing marketing channels – for free
This happy state of affairs is good for both me and my clients as future issues will be dealt with much more efficiently with an experienced and understanding landlord.
Don’t Let Margins Get Squeezed
Another issue that has arisen is that costs have begun to escalate.
IT infrastructure, professional association fees and increased rent have been the main culprits.
Soaring costs are only a short-term problem for now
Rent is not a long-term problem since it does not increase as I grow revenue and simply remains flat.
IT infrastructure and professional association fees are also not long-term problems cash flow wise because they too remain flat even when revenue increases.
Short-term however these costs are having an impact on cash flow insofar as margins are being squeezed.
The answer is to increase revenue (get more clients) which has taken a back seat due to the IT and venue issues which have been resolved.
It’s therefore a simple waiting game from now on but I can at least busy myself with organising the first marketing push for the business during this time.
All of this has meant I’ve been unable to purchase physical gold this month much to my annoyance, but I did manage to get hold of some silver.
What I’ve Learned And What I Will Implement
When I visualize the very short lifespan of the business I see a series of steps; some of them needed stepping over, the rest were upward steps.
None were downward or backward steps.
The way I’ve managed start-up growth is not by focusing on sales and marketing but on managing the expectations of my existing and very new clients by taking action in response to their concerns.
I’ve also made sure that the infrastructure is sound by buying in the necessary IT and getting professional accreditation. All these things make sure that cash flow is positive and the portfolio stands up well against it’s benchmarks.
Throughout this process I’ve always remained in contact with clients and as I write one way I could leverage customer service of this kind is to migrate future customer service matters onto the Facebook fan page.
My theory here is that it will show fans and potential clients that common issues are resolved without fuss.
Here’s a reminder of how the rest of The Shares and Stock Markets portfolio is a made up:
- UK government bonds – 1.25% pa
- Cash (in readiness to buy stocks when they become cheap again) – 0% pa
- High interest bank accounts – 5% pa
- Physical gold and silver – ?%
Note how there are still no stocks in the portfolio and I can’t see that changing any time soon.
That’s it for this month and to get notified of next month’s report and get articles by email subscribe below and grab yourself a free ebook.