This is starting to get annoying.  I have done my best to buy when the moving averages cross upwards and sell when they corss downwards but……as soon as I do the “right thing” it turns out that the evil indicators lied, and I actually did the “wrong thing”. 

All the trend following books warned me that this would happen.  They said that you would get far more losing trades than winning trades.  They explained that the few winning trades would be far bigger than your losing ones and will more than compensate.

But, you know what…it still hurts.

Take the UK Property fund ETF (IUKP) for example.  It looked like it had bottomed out and had turned the corner.  I was ready to enjoy the ride upwards.  But now, two months after investing, the 40 day moving average has crossed below the 100 day and has taken 6% (around £300)  of my initial investment with it.

I also seem to be missing out on gains being made in the general market which makes the losses even harder to take.  In retrospect it would be hard to have done anything different.  I will persist but probably include a holding in the world index IWRD to ensure that I keep up with the general market at least. 

So the month of April was a bad one - I was down 4.7%……must try harder next month

Here is a really good article summarising  the strenths and weaknesses of Investing in Exchange-Traded Funds (ETFs).

A further advantage for UK based readers is that there is no stamp duty (transaction tax) to pay when you buy an ETF. 

If you think you can read charts you should try this great website.  It makes you realise just how difficult it is to consistently predict a stock’s direction.  Warning - it is adictive!

What an annoying month it has been.  I have managed to throw away all of the gains I made last month so that I am back where I started.  The reason for this poor performance was the huge swings in commodity prices that made me sell, buy, and sell again.  All transactions were probable at the worst possible time.

In total I lost 3.9% on my SIPP portfolio in the month.  This is 2.9% worse than the IWRD benchmark that I am measuring myself against.  On the bright side, since I started the portfolio, my losses are 1% less than those I would have suffered if I had simply bought and held IWRD.

There are no real trends evident in equities.  I am not sure I want to get back into commodities again so soon after having my nose rubbed in the uncomfortable situation of whip-sawing but I feel I should……

Here is my performance against IWRD in tabular form…….

The aging process is often portrayed negatively as a time of decay and despair.  With failing memories and physical deterioration and nothing positive to look forward to, why do we need high levels of financial support during this time?

I am studying for a psychology degree, and read with interest the ideas of a psychologist called Peck (1968).  His ideas are based on a number of identity crises that we pass through as we age.  Here they are:-

• Valuing wisdom versus valuing physical powers

• Socialising versus sexualising

• Flexibility in emotional attachments versus attachment impoverishment

• Mental flexibility versus mental rigidity

• Ego differentiation versus work-role preoccupation

• Body transcendence versus body preoccupation

• Ego transcendence versus ego preoccupation

So lots of long words and psycho-babble?  Or is this really useful?  Let me explain each of these crises in turn and I think you will see that they make sense and understanding each of them could help a lot of people through the aging process into a long and happy retirement.

Valuing wisdom versus valuing physical powers – this means coming to terms with loss of physical power and physical attractiveness.  At the same time we gain skills in coming to informed decisions (wisdom) and should stop thinking of using physical abilities to solve problems.

Socialising versus sexualising – we need to stop thinking of others as potential sexual partners and start thinking about companionship

Flexibility in emotional attachments versus attachment impoverishment – the need to let go as children leave home and parents die.  People have the opportunity for more diverse emotional relationships and friendships with both young and old

Mental flexibility versus mental rigidity – getting stuck in your ways needs to be avoided.  Open your mind to new thoughts and opinions.

Ego differentiation versus work-role preoccupation – there is a need for older people to re-define themselves from bread-winner to some other worthwhile role in society

Body transcendence versus body preoccupation – this is the coming to terms with physical deterioration and learning to enjoy more mental tasks and relationships

Ego transcendence versus ego preoccupation – coming to terms with one’s own death and preparing to ensure good comes from it in a form of legacy

I personally enjoyed reading the thoughts of Peck.  I can see these changes in old people I know.  I can see that some have come to terms better than others with these changes.  Knowing about them in advance should help mentally prepare for them.

I hope this post will be of help to you, and others you know who may be approaching middle age and the changes involved.  Pass on the link as it may help!

The oil price is continuing to fall today and is dragging the Commodity ETF LCTY down with it.  It is a real shame because I like the story of rising commodity prices (demand from China etc.) but the ETF price has fallen below my stop loss.  It should have gone sooner but I held on.  So I lost more of my profit than I should have.  I have walked away with £500 profit but it was twice that.  Never mind. 

I will sit quietly on the sidelines watching and waiting.  Perhaps LCNE (the no-energy version of LCTY) is a better bet?  I will keep my beady eye on it and let you know what I do……

One thing is for sure, you will not have a decent quality of life on the state pension.  This means that you need to make some provision for the period of time between giving up work and the inevitable “shuffling off the mortal coil” as Monty Python would put it…..

Luckily I have 16 years worth of final salary pension waiting for me.  This will pay me enough to get by on when I hit 55.  But for the fun bits in life (travelling, going out etc.) I have two plans; one is buy-to-let properties and the other is my SIPP.

The buy-to-let is pretty tough at the moment.  Even though I bought the 3 properties 3-4 years ago they are still a slight drag on cashflow each month.  Having a non-paying tenent in one flat doesn’t help.  The legal system is making it very difficult to get him out, but things are coming to a head at the end of this month so hopefully we will get our cashflow back to covering the mortgage payments.  Then it is a case of waiting and waiting patiently.

The SIPP is going OK.  An active trend following approach is definitely adding value.  If I had left my funds invested in shares in my previous employer (that I bought through Save as You Earn schemes) then I would have lost a lot of money recently.  You see, I worked for a bank and the share price for most UK banks have fallen by nearly half over the last year.  I know many many ex-colleagues who have sat tight on their bank shares.  They say things like “I’m not worried, I’m holding for the long term” or “I would be stupid to sell now that I have made a loss”.  I cringe but bite my tongue.  What a waste of money.  In some cases their ignorance is costing them many tens of thousands of pounds.

I guess the majority of people with investments in company pension schemes are in the same boat.  Even though it is not visible to them, their future pensions are getting smaller.  If only they had the ability and knowledge to hold other asset classes in their pensions while equities are taking a beating.

Of course it is not easy - I am making mistakes all the time but at least I am fully aware of them, and I am learning all the time.

One thing that I have learned over my years of investing is that markets continue to move much further than the average investor could imagine.  I think that this is what is happening now - and I expect that the falls will continue for a time yet.  I am glad that I bought the Short S&P 500 ETF.  Its gains today hedged the loss on the UK Property ETF.

Unfortunately the commodity ETF dropped too as the economic problems in the US knocked the oil price.

I have decided to trust the trend following system and buy on a moving average cross-over.  I have been watching the UK Property ETF for some time and waiting for this signal.  Now it has happened I can’t really change my mind, can I?  The downward trend has been so clear and the reversal so inevitable that it should be a great time to get in.

Here is the chart…..

See what I mean about the trend?  Hopefully this should be a long-ish term holding - it took a year to reach the bottom so it should trend up for as long.

I have created a new page that I will update regularly showing what is in my portfolio at the moment and how the SIPP is tracking against the World Index

Hopefully you will find this interesting. Remember to keep checking back to see progress!