My 5 Commandments For 2015 And Beyond

05 January 2015
By Maynard Paton

So it’s early January and the time of year when we all resolve (once again!) to improve our stock-picking for the forthcoming twelve months.

But for me — starting out as a full-time investor — I really do need to ensure my portfolio does not fall apart during 2015.

I mean, my future wealth is now entirely dependent on my investing skills, and I certainly do not want to end up broke by Easter!

As such, I’ve decided to bypass the usual New Year resolutions to instead go for some serious-sounding commandments — which I hope I can strictly obey to avoid financial ruin!

Sadly I do not have any spare stone tablets lying around at home, so I’ve made do with this Blog post for the inscribing:

1) I will focus on buying good companies for the long term

I am a natural long-term investor. Ever since I read about Warren Buffett twenty years ago, I have been hooked on the idea of buying into quality firms at attractive prices and compounding the gains over many years.

True, I have suffered somewhat from ‘style drift’. I have succumbed to the tempting turnaround bet or deep-value play in the past, and a few remain in my portfolio today. Sadly, my results from such lower-quality companies have been mixed.

In contrast, my results from better-quality names have been quite respectable — although some patience has been required to enjoy the gains.

And now, with more time to pinpoint higher-quality companies, I hope in due course my portfolio can become a real ‘hands-off’ affair — chock-full of decent businesses with only minor re-balancings performed every so often.

2) I will regularly revisit all of my holdings

I am guilty of conducting only superficial research on most of my existing holdings. Up to now I could blame lack of time, but there is no excuse from today.

As I mentioned last week, the biggest share disasters we might face in 2015 and beyond are probably sitting in our portfolios right now.

I’ve already scanned my portfolio for obvious ‘timebombs’, but I won’t feel entirely comfortable until I’ve had a good look at each holding.

So far I am on top of just five holdings, so there are another nine to go. Next up for a closer look is French Connection, the findings of which I aim to publish during the next few days.

This resolution also entails keeping up-to-date with all the news from my shares — and publishing my verdicts. Let’s see how I get on with that.

3) I will look to diversify my ISA and my SIPP

Similar to most investors I guess, my shares are spread across an ISA and a SIPP. But the actual spread between the ISA and SIPP is far from even.

In particular, my top three ISA holdings are City of London Investment at 23%, French Connection at 20% and Tristel at 17%. Meanwhile in my SIPP, Mountview Estates represents 21%, Tasty 14% and FW Thorpe 12%. It’s all concentrated stuff.

As I’m younger than the SIPP ‘retirement’ age of 55, the performance of my ‘accessible’ ISAs is more important to me right now than my ‘locked-up’ pension. So I do need to look at diversifying my ISA somewhat — just in case my ‘big bets’ go wrong.

4) I will start and maintain a watch list

I think the best way to diversify my ISA is to find some fresh buying opportunities. And in my experience, the best way to find fresh buying opportunities is to start a watch list.

Watch lists really are one of the most simple and useful — and yet under-rated — aspects of successful investing. All you do is find some companies you like the look of, work out an attractive buy price… and sit back and watch.

Often my watch-list shares never fall to my buy price. But that doesn’t matter to me — I can live with only a handful of good buying opportunities a year and if I have a long enough list, suitable candidates are bound to appear over time.

For me, the main benefit of a watch list is being able to act decisively when opportunities arise — because I should be fully informed about the shares in question from all that ‘watching’!

Plus, there’s the advantage of not straying into unfamiliar companies and performing slapdash research in a rush to invest. I’ve suffered no end of losses from doing that in the past.

5) I will do my best to avoid all distractions

I really do need to make this full-time investment lark a success. So I plan to dedicate as much time as I can to evaluating my existing shares and looking for new investments. I figure the harder I work, the better my results should be.

So… I don’t plan to be that active on any share forums. I don’t want to sound like a killjoy here, but I have always found discussion boards and social media to be alarmingly addictive and quite distracting. As such, they could be very harmful to my time — and therefore my wealth!

That said, I will of course respond to every reply posted on this website and I will Tweet every time I publish a new Blog post. But my other Twitter activity will be minimal. I hope you understand me keeping a low profile.

Thou shalt do thy best 

Well, those five commandments all feel good right now. Whether they will last beyond January though — let alone all the years ahead — is of course another matter! I could easily end up inscribing more — who knows?

Whatever, a new challenge awaits me and at least I have laid out a basic plan that I trust can lead to success. Let’s see how I get on.

Until next time, I wish you happy and profitable investing!

Maynard Paton

Disclosure: Maynard owns shares in City of London Investment, French Connection, Mountview Estates, Tasty, FW Thorpe and Tristel.

6 thoughts on “My 5 Commandments For 2015 And Beyond

  1. David (Charvil from CS PRO)

    Mayn,

    Very good advice, best of luck!

    Do you also have a rule about how many times a day you are allowed to look at portfolio prices!

    David

  2. Eiron

    Nice blog! I haven’t read your articles on TMF before but I am enjoying your blog. I have sat here reading from page one to commandments so far. Its really nice seeing a blog about long term investing instead of a blog with enough chart screenshots that makes a teenage bedroom poster wall pall in comparison.

    I have started to full time invest and I defiantly understand what you mean by Twitter is a complete distraction! I used to be an Expat in China (no twitter etc..) and I swear since coming back to UK my investment returns have taken a hit.

    1. Maynard Paton Post author

      Hi Eiron

      Thanks for the comment and I am glad you like the site. The best of my recent TMF stuff is behind a paywall, but if you search in Google for “Maynard Paton Qualiport” you may find some links to some of my old TMF stuff that I think has stood the test of time. Good luck with your full-time investing.

      Maynard

      1. Eiron

        Hi again,

        I just finished the rest of the blog up to your recent Getech blog. It is always interesting to see what other investors value. Im glad you won’t post your target buy price. It gives you the freedom to say what you want and stops the tipster horde filling up the comments.

        I see you like EV but i was curious why do you deduct investment properties and equity investments/holdings?

        1. Maynard Paton Post author

          Hi Eiron

          I’ll deduct investment properties and equity holdings if they seem to be ‘surplus to requirements’. I think FW Thorpe has both of these assets and Elec Data Proc has surplus freeholds. From what I can see, both of these businesses could continue to sustain their current profits if such items were sold off. It makes sense (to me at least!) to deduct these items to get the EV figure, but I am sure other investors may have different ways of producing EV.

          Maynard

Comments are closed.