Considering the FTSE 100 slid about -11.50% and the FTSE 250 went down almost -15%, I’m not too unhappy with my performance for 2018.
My quarterly returns were:
- Q1: -1.09%
- Q2: 7.43%
- Q3: -5.27%
- Q4: -1.89%
If I just took an average of these to calculate my yearly return, the result would be -0.82%. Unfortunately, it’s not that simple since I didn’t invest a lump sum at the start of the year, but kept making contributions into my investment ISA whenever I found companies that I wanted to invest in.
Due to these irregular cashflows, I have to use XIRR in Excel to find the correct figure:
Using XIRR to calculate my compounded annual growth rate gives me -3.23%, which is reasonable compared to the performance of the wider stock market, but not good enough for me.
I invest in companies that are having temporary issues because that’s usually when they are selling cheaply, there’s greater upside potential, and a lower chance of their share prices crashing further. The problem is that if I make a mistake analysing a company, it might be a big one. This was the case with FRAN, for which I only considered its financial statements (which were pristine) and failed to consider its likely future sales performance in the face of changing consumer buying trends. Its problems were not temporary, but structural and accelerating.
Everything is moving online, and even I look up prices on the internet when I go to a physical store. Ignoring this was very stupid, and if I hadn’t invested in Francesca’s Holdings I would be up more than 10% in 2018. Hopefully, I’ll take this experience on board and not make mistakes like this again.
2019 is off to a nice start. In three days my portfolio went up £312.33 (a little over 3%) and now stands at £10,578.57, rising faster that the general market.
Most brokerages and analysts are predicting a recession this year, and I hope they are right. Even though my investments may go down a bit as well, I want to be able to buy good companies at big discounts, and want to put more money to work.
Here’s to a prosperous 2019!