Page 9 - DIY Magazine September 2018

MY FOCUS THESE DAYS IS ON HOLDING A DIVERSE PORTFOLIO OF QUALITY STOCKS AND MAKING FEWER BUY AND SELL DECISIONS
annual return on my Trading ISA and dividends alone add 3% - a big chunk of my yearly target, so I only need to worry about the other 7%. For my Income Portfolio I target a dividend yield of 5% on a total return of 7% a year, with a lower level of risk and a high degree of inactivity.
• Stress and Worry Avoidance – A patient approach to long term investing is also more relaxing; important for me as I detest and avoid stress. In ‘Trade like a Shark’ Robbie Burns repeats that we need to be robotic like Mr Spock – this certainly chimes with being unstressed and calm.
• Work / Life Balance – I developed an approach
to long term investing whilst working full-time that allowed me to leave my portfolio largely ignored
for many days and then focus on it when things were quieter; many of you will be juggling being an employee and an investor. I ‘retired’ 9 years ago to use my life to do the things I wanted to do; my ‘work/ life balance’ means that by a Friday (or Thursday!)
I have lost interest in the markets and I want to be ‘working’ down the pub with some investing mates chatting about investment and individual stocks but also just relaxing in the sunshine! Relaxed and patient suits my lifestyle.
– learn to drive on a motorway.
My ISA is down to 40 stocks, a useful discipline; my Income Portfolio holds 12 stocks and defines patience – just one trade in 2018!
Another important habit is ‘thinking ahead’; having a set of rules for your portfolio which pre-determine what action to take in certain circumstances – ‘sell on a profit warning’ or ‘sell half if your stock doubles’.
Thinking ahead - winter is the best time of the year for stocks and summer usually pretty hard going – so lower your exposure in the summer and prepare to buy if we get a good sell-off in the autumn.
Thinking ahead buys you time - long term investors should not require snap decisions; be patient, ride the waves and don’t get spooked out of quality stocks.
That’s it for Part 1 – next time I’ll goes into particular instances where a high level of patience is a big help.
Cheers, WD.
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To enable this freedom I focus on holding a diverse portfolio of quality stocks, making fewer buy and sell decisions but each stock must bring something to
the ‘portfolio party’ – be that income, growth, stability, diversification, sector exposure etc.
Wheelie-bin Stocks need lots of effort and focus and often luck; if you are not able or prepared to put in the time, keep well away.
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Investors/traders nearly all start off precisely the wrong way; we buy as much AIM garbage as we can, get our rears kicked hard and then realise that buying quality stocks is a much better way if we have a life to live (or just give up); shame we don’t do it the other way around
9 DIY Investor Magazine | Sep 2018