Monday, December 23, 2013

Predicting Stock Market Returns

This correlation is pretty amazing. It is also pretty clear that there is causation here too or both variables are driven by the same other causal variables.

Monday, December 02, 2013

Moominvalley November 2013 Report

Turns out that I miscalculated and we didn't quite reach USD 1 million last month. This month due to the fall in the Australian Dollar we are further below it to $975k. In Australian Dollars we reached $1.069 million, up $A14k on last month. The monthly accounts (in USD) follow:

Spending was high this month. First, I had a bunch of business expenses for a trip early next year. Then I had to pay my employer a refund of half the price of an airline ticket for our trip to the Northern Hemisphere this past Northern summer. Otherwise, they decided retrospectively that they would have to pay fringe benefits tax and they don't want to do that... We still spent about $A6k after deducting these which seems to be the new normal. As a result we only saved $2.8k from regular income.

We lost money on investments - $28k - mainly due to the fall in the Australian Dollar of about 3 US cents. Rate of return for the month was -2.87% in USD terms or +0.83% in Australian Dollar terms. The MSCI gained 1.04%, the S&P500 3.05% (the unstoppable Energizer Bunny), and the ASX 200 lost 1.31% - the first two indices are in USD terms and the latter in AUD.

I made a major investment in managed futures as already mentioned in the blog. This month I will subscribe to the Platinum Capital rights issue for about $A7.5k. At the end of November our allocation of gross assets looked like this:
Of course, this isn't the same as the allocation of net worth due to leverage. Total leverage is about 34% i.e. 34 cents borrowed for each dollar of net worth. We retain that much cash while borrowing due to looking still to buy a house...

Sunday, December 01, 2013

Investments Update

Stock markets remained very strong globally, and particularly in the United States, this month, but not so much in Australia. The ASX 200 actually fell 1.31% while the SP 500 rose 3.05% both in local currency terms. The MSCI World Index was in between with a 1.46% increase in USD terms. Australian small caps were particularly weak. Our small cap investments lost 2.58% while our large cap Australian stocks bucked the trend and gained 0.82%.

A lot of our funds and stocks are hitting all time max profits for us

Colonial First State Geared Share Fund (Aus managed fund)
Unisuper (industry superannuation fund)
PSS(AP) (industry superannuation fund)
Colonial First State Diversified Fund (Aus managed fund)
CREF Global Equities (US retirement fund)
Colonial First State Geared Global Share Fund (Aus managed fund)
Generation Global Fund (Aus marketed managed fund from Generation)
Boulder Total Return Fund (BTF)
Colonial First State Diversified Fixed Interest Fund(Aus managed fund)
Macquarie Winton Global Alpha Fund

So diversifed and international funds and large cap Australian stocks are providing us with good long term returns. Australian small caps have been good but not in the past month.

Looking at my Mom's investments, finally we seem to have exceeded the pre-global financial crisis peak. Some funds though are worth less than what we paid for them and some more (we don't track the dividends from funds that pay out dividends so this isn't very accurate). What has done really badly are India and Brazil funds and commodities funds somewhat less badly. Hedge funds, large cap developed country stocks, diversified funds have done well in the long run.