The year has ended on a high note for my portfolio. Turning Point Brands´ value increased almost 20% over the days between Christmas and New Years. It seems like the market has suddenly woken up to recognise what the Trump administration´s tax cuts will do to a business that generates almost all of its profits in the U.S. Further, dialysis services provider Davita announced the sale of its Healthcare Partners division for USD 4.9 bn. which has been a drag since its acquisition in 2012. This was rewarded by the market with a 30% run. An allocation of these proceeds to share buybacks and debt retirement should push the value of Davita´s equity further up towards USD 90 per share.
Incorporating this stretch towards the finish line of the old year Investing0711 returned 13.57% for the full year. This was achieved against a 14% headwind from EUR/USD. Performance was further mitigated by holding large excess cash balances. All of this results into beating the SP500 denominated in EUR by 8.8% while trailing the benchmark in local FX by about 5.9%.
For the new breed of “investors” that have entered the market with beginning of the year a low double digit return might look pitiful, when so-called crypto-assets have returned in excess of 1000%. Seeing other people getting rich is a strong incentive to mindlessly follow individuals preaching the most wonderful numbers that Bitcoin, for sure, will reach into assets that might have zero fundamental value. Not having given in to this FOMO definitely counts towards one of my bigger successes over the past year to become a better, more rational investor. After all investing is not a sprint but a marathon and sky-high returns followed by a 100% drop still equates to a big zero.
The biggest challenge for 2018 will be to deploy the excess cash that I am currently holding. I have only very few ideas of candidates that might make a good fit. And given that equity valuations have increased to even higher levels from last year`s already very high level, I will be well advised not to lower my standards for new positions. On the contrary I will try to curtail risk and if possible additionally seek allocations in pockets of the market that are uncorrelated with the development of the broad equity and bond market indices.
I wish everyone a happy, healthy and successful year 2018.
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