Gloomy November

It's been a rotten month for my portfolio. Financials and smaller companies, where I'm overweight, have been badly hit. The figures for 2007 as at end-November:

Me -4.4%
FTSEAllShare +4.7%
FTSESmallCos -9.8%

This looks likely to be my first year of relative underperformance since 1998. No whingeing, it's my fault. The credit crisis has intensified and the Governor of the Bank of England has warned recently of the dangers of a sharp correction in share prices (but he was probably looking at the general level of the UK market, as measured by the FTSE100 and hadn't noticed that there has already been a sharp correction suffered by smaller companies).

My recent strategy, due to scepticism about the strength of the UK economy after 10 years of tax-and-spend socialism under NuLabour, has been to reduce UK exposure, especially to the shares of retailers, and to increase overseas holdings. However, some sectors, such as real estate and and non-residential construction and quite a few smaller companies appear to me to have become oversold. This has led me to purchase: more Kier, Land Securities, and T.Clarke. There are quite a few smaller companies with yields above 5% and P/E ratios below 10 where I'll be looking for bargains as funds become available.