2007: a difficult year

My first year of relative underperformance since 1998, down 8.7% compared to the FTSEAllShare's positive 5.5%. Partly explained by the bad time smaller companies have had on the UK market - the FTSESmallCos being down 9.9% - but much due to a too early rush into financials, including the doomed Northern Rock .... presumably their ex-directors who made heavy mid-summer purchases of shares in the summer must look upon 2007 as a year to forget.

I was also too optimistic about the direction of the market which not only ended the year rather flat, but promptly began to plunge steeply in the first weeks of 2008.

Two steps forward, three steps back

This title might summarise a horribly difficult late-summer and autumn period for me, where I have made some bad mistakes. Worst has been following quite heavy share purchases by directors of Northern Rock. This alone has lost me more than £10k - my largest ever losses on a single share. My purchases of financials has also proved too early and cost me dearly. My outperformance of the (pathetic) FTSE has disappeared making this my worst year since 2001. As at 2nd Nov:

Me - 5.6%
FTSEAllShare - 6.4%
FTSESmallCos - -1.5%

The reduced market values of UK banks now seem to far exceed even a worst-case scenario of sub-prime infection - see here. So I have continued buying. In the short-run this has been painful.

I should add that I am more pessimistic about the UK economy than hitherto. It is being emasculated by the creeping (creepy) socialism and rampant (and intolerant) political correctness of the Labour government. I was happy to see Gordon Brown and Ed Balls exhibit their idiocy over the election-that-never-was. At least I made some money on betting against there being an autumn election. I have also bet on the UK election being postponed until 2010.

Unfortunately, this all imples two-and-a-half years more damage being inflicted by these high-spending clowns. Against this background, I have recently invested more in overseas markets and reduced holdings in shares dependent on the domestic UK market.

July: Even Wetter and More Turbulent

Lucky enough to be out of Birmingham most of July and, thus, missed most of the biblical rain experienced here and in the West of England. But the market turbulence got me, and I'm £30,000+ lighter at the end of the month. Nevertheless who wouldn't be pleased with this end-of-the-month summary of relative performance so far in 2007:

Me: +8.0%
FTSE100: +3.7%
FTSESmallCap: +2.3%

Luckily I had some cash when I got back and on 29 July I bought £50k+ of shares. I reckon at this level there are bargains around. My buys were: FTSE100Index (£37k), Northern Rock (Mortgage Bank), more Bellway (housebuilder), Glaxo (Pharmaceuticals). During the month I took some profits on Miners, Antofagasta and BHP Billiton. I hope to update on my portfolio's top holdings shortly.