Tag: John Rosier

Should I Sell US Stocks?

Easter gives one time to review your share portfolios. In last week’s Investors Chronicle John Rosier reviewed his portfolio and the impact of Trump tariffs. He has been “purging” US exposure from his funds portfolio. He has sold Polar Capital Technology (PCT) and JPMorgan Global Growth and Income (JGGI), both of which I hold, and several others. The exposure of Fundsmith Equity to US Stocks also proved unhelpful to his overall performance and mine.   

With the S&P 500 down 10% in the last six months, is it time to refocus on other markets and dump US holdings? I am not so sure.

It has certainly been the case that buying the US markets has been a simplistic trading strategy in the last couple of years. You couldn’t go far wrong by investing in US companies or US index trackers. Tariffs will certainly have a negative impact on the US economy and several other countries. China should be particularly badly hit.

But has the world really changed?  Famous investor Warren Buffett has said in the past “never bet against America” and he has proved right so far. The size and vibrancy of the US economy is not easy to beat and trade tariffs may only have a temporary impact. The US economy is so attractive to the best and brightest immigrants that it is like a lamp to a moth. That accounts for much of the success of the US technology sector in recent years.

It’s exceedingly difficult to predict what will happen to the world economy and changing portfolios based on short-term economic forecasts is surely a mistake.

There may be some opportunities to pick up as panicking investors dump holdings of US stocks or funds because they are scared of what Trump might do next, but this is surely a time for holding one’s nerve, not for responding to emotions. The dominance of index tracking funds is making the waves of emotions that sweep stock markets more pronounced than ever but now is not the time to ride those waves.  

With signs that progress on peace in Ukraine and Gaza is looking more likely, it is time to be optimistic rather than pessimistic about the state of the world and the major economies.

The UK economy is a different story though. Higher taxes are going to have a negative impact while Trump is aiming to reduce US taxes by cutting Government expenditure. He surely has the better strategy.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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IC Articles and Satisfying the Urge for Action

I have been reading the latest edition of the Investors Chronicle magazine. John Rosier’s article was particularly interesting as he discussed several of my current and past holdings.

For example he mentioned the merits of Paypoint (PAY) which was up 15.8% in June. He says “On 13 June, results for the year ended 31 March were in line with expectations. The good news, however, was the boards commitment to building shareholder value. It announced the start of a £20mn share buyback, representing about 4.5 per cent of the current market capitalisation”. Other positive comments followed. John suggests the market is materially undervaluing the company. Valued at around nine times earnings and on a dividend yield of 7 per cent, he suggests there is more to come. As I have held the share for some years, I hope so even if I don’t like share buy-backs.

John also mentions Serica Energy (SQZ) positively. I bought this at 390p in 2022 on the recommendation of one of my stockbrokers but sold at 255p at the end of that year. It’s now 136p so at least I made the right decision to sell. Is it worth revisiting? I don’t think so. It’s usually a mistake to revisit old errors in the hope of some recovery. The moral is perhaps not to follow share tips from brokers.

John also covers Polar Capital Holdings (POLR), a fund manager. Dividend was maintained giving a yield of 7.8 per cent and assets under management are increasing. So that’s another one I like also.

He also says he has invested in a fund called VanEck Crypto and Blockchain Innovators ETF (DAGB) because he wants some exposure to bitcoin. He admits this is a highly speculative position but as he has limited it to 1.5% of the portfolio it can’t do a lot of damage. This looks like an urge for some excitement in the quiet summer period on stock markets. I certainly won’t be following that urge. Such a small holding is not showing much confidence that this bet will work out. But if it satisfies the urge for action it may be pacifying.

If I want more excitement I will buy more Bango (BGO) or Verici Dx (VRCI) who both made positive announcements this morning. Interesting companies if difficult to understand and certainly speculative.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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John Plender and John Rosier Articles and Technology Update

John Plender published a good article in the FT on Friday. He covered what he had learned from five decades in the investment world. This was a period when the “cult of the equity” took over from investment in fixed income bonds. With inflation racing ahead of interest available, bonds such as Government gilts were a big loss-making investment. They may have been nominally “safe” but only equities offer some protection against inflation caused by Government policies. This cycle has been repeated more recently.

There is much to learn from this article and he concludes with this wise comment: “After a lifetime spent watching the markets, I am struck how, with each new cycle in which central banks act as lenders of last resort, debt mounts inexorably. We continue to muddle through. But a great debt denouement is inevitable because debt cannot rise faster than incomes for ever”.

See https://www.ft.com/content/52f06fb9-ef15-498f-9a98-39673c960de4 for the full article.

Another good article was published on Friday in the Investors Chronicle by John Rosier, who managed to achieve an even worse portfolio performance than mine in 2023. He had this to say:

“Lessons from 2023. It was a poor year for me and while it is tempting to beat myself up, 12-year record of 12.4 per cent per year is good. However, as a matter of good housekeeping, I should examine what lessons I should learn from 2023. In last month’s outlook, I pondered whether I had been guilty of focusing too much on macro factors and not enough on bottom-up stockpicking. The conclusion must be yes. My exposure to commodity stocks, although helpful in 2022, was hugely detrimental in 2023. I had too much exposure to this theme. I allowed my belief in the positive drivers to influence my portfolio construction. I was also too obstinate to change course – perhaps because I had invested too much emotional capital in such a significant exposure. I intend to shift the balance back towards bottom-up stockpicking – in truth, I already have with purchases of stocks such as PayPoint, highlighted earlier……In what is a perennial problem for me and many, if not most, investors, I must get better at cutting losses earlier”.

His comments could just as well apply to my own portfolio management although not to such an extreme. I may from experience have avoided the worst mistakes but am still not cutting losses early enough.

One thing I have done this week is update my technology usage. My 10 year-old Lenovo Thinkpad Carbon X1 was a great business laptop PC running Windows with a touchscreen but battery life had dropped to about 2 hours so it was time to replace it. I have purchased a Samsung Galaxy Tab S8+ tablet to replace it. With more than 8 hours battery life it can last for a dialysis session where I like to watch old movies. These are readily available from YouTube so I watched a film called Greenwich Village last week. It included a memorable dance routine from William Bendix who usually played “heavies” in the 1940s. To quote from one biography: “character actor William Bendix’s burly physique and New York accent were equally suited to playing genial lugs and vicious thugs”.

I am still running a Windows 10 desktop PC for my main business applications which should last another couple of years.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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