Welcome to the first Monthly Portfolio Value Report.
This is where I detail the investments I’ve made during the previous month (if any) and how the growth of The Shares and Stock Markets Portfolio on a total market value basis is going.
I’ll also post the lessons I’ve learned and the problems I’ve encountered and how I intend to deal with them in the future.
Total market value is calculated by adding the market value of all the investments such as open stock positions plus cash in-flows from the private business and realised capital gains, minus the costs it takes (if any) to generate returns.
I’m basically sharing the net change in market value in The Shares and Stock Markets Portfolio on a month by month basis.
Accounting for the investments in this way forces me to keep the SASM Portfolio at the forefront of my mind on a day to day basis to try and generate positive returns every month.
Specifically that would mean:
- Trying to gain more customers for the private business
- Keeping abreast of the value of the stock market
- Researching potential undervalued stocks for long-term investment
Without further ado let’s get straight into what happened.
What Happened In January?
I had a huge task ahead of me for January and research really began in early December of 2015.
In a nutshell my task was to appropriately allocate cash to different investments ready and in time for the beginning of 2016.
As such the Christmas holidays were frantic.
The first place I started was to value the stock market; was it fairly valued or was it too high? In the end I came to the conclusion that the value of the stock market was too high on a PE rating and that no stocks were to be purchased which presented another problem: what investments are there that are low-risk and can generate an income?
After a frantic search I came up with the following split among different asset classes:
- 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 – ?%
The way I figured it was that if stocks became very cheap I’d have cash on hand earning 5% (risk free due to the bank deposit protection scheme in the UK) and this is how The SASM Portfolio looks right now with absolutely no stocks but lots of cash and precious metals.
New Investing Experiences
One fantastic fallout from the research that went into the investments was the wide range of reading and investment ideas for the future.
— David Thomas (@djthomas) February 11, 2016
For great deals on bank accounts for UK residents for example, I used moneysavingexpert.com and I highly recommend you sign up for the free email that alerts subscribers to money saving tips, vouchers, deals on bank accounts and lots more.
But the biggest learning curve for me in January was being a buyer of physical gold and silver for the first time which turned out to be a pleasure rather than a pain (a 5% increase in gold prices helps).
It’s actually not as difficult as you’d think; shopping for gold is just like shopping for groceries once you understand the basics.
Gold: the ultimate store of value
Another positive achievement in January was the launch of a small private business the cash flow from which was used to purchase precious metals.
What’s really good is that it has produced positive cash flow from month one and looks as though it will continue to do so for the foreseeable future.
Once the business gets more established I’ll report back here with the details.
My only respite from all this research was a trip to the cinema with Mrs Sharesandstockmarkets to go and watch Star Wars The Force Awakens which turned out better that I had expected.
His ‘n’ hers 3D specs
I’m a huge fan of the Star Wars franchise and can’t wait for the next movie which as I understand is out for Christmas 2016 and is called ‘Rogue One’.
The Shares and Stock Markets Portfolio Value – January 2016
The Shares and Stock Markets Portfolio value monthly change: +3.12%.
This entire return can be attributed to the addition of physical gold from ‘surplus cash’ from the household monthly budget and free cash flows from the private business.
According to Reuters gold has risen in value by over 5% for the month of January alone.
I’m not worried about the monthly or yearly price swings in gold since gold is simply a store a value that can be unlocked at any future date and is a hedge against economic Armageddon.
The gold price over the last 6 months pic.twitter.com/lheCNcrMRD
— David Thomas (@djthomas) February 11, 2016
One thing I learned when buying gold is how amenable gold dealers are to a bit of haggling.
Don’t be afraid to squeeze gold dealers for the best price and if they are rude about it there are plenty of dealers who will accommodate you.
I’m in the middle of writing a short report on the things I’ve learned about buying gold so watch out for that over the coming weeks.
That’s it for this month.
Watch out for next month’s report; the best way to get notified of when it’s out is to subscribe for free to the newsletter below.