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OK, it’s performance time. For reference, here’s a link back to my Q1 2012 review.

If I told you European markets were actually positive in the first half of 2012, would you believe me?! Actually, it’s true. Wow, doesn’t feel like it, eh..? Hmm, I think we all know that’s just the tip of the iceberg in terms of the tricks the media & your own mind/emotions play on you. Say what you like about Microsoft & Excel, spreadsheets are your only hope of separating fact from fiction, and analysis from emotion (as for Powerpoint, sigh…).

Some notes first: For simplicity, an equal weighting is assumed for all stocks. No attempt’s made to calculate any FX gains/losses either – which would depend on your base currency anyway. If a stock wasn’t held/written-up as of year-end 2011, the price noted at the time of my investment writeup is used instead. Similarly, if a stock was sold (marked**) before end-June, the price noted when I reported the sale (via blog post, comment and/or tweet) is used. Right, so how did we do in H1 2012?

I think we can certainly blame natural resources as the villain of the piece! How did the 2012 Baker’s Dozen (basically a subset of the above portfolio) do?

The out-performance of the Baker’s Dozen continues, for a similar reason – it fortunately missed out on holding most of the natural resource stocks (I’m including Russia in that definition, obviously). And how did the stock indices do, by comparison?

You’ll notice I’ve added a European index into the average this time ’round. This now means the average nicely matches the exposure(s) of the majority of my readership. I’m not quite sure why I left it out at the end of Q1 – bit of a slip-up really, reflecting the lack of European stocks in my portfolio, I guess. But that’s not the correct approach to benchmarking, it’s just as much about measuring the impact of what you don’t buy! And I’ve been avoiding European stocks v deliberately, so I’d like to have some assessment of that decision.

In fact, I should correct myself, I consciously opted for European equity exposure via a v specific (and colossal) over-weighting in Irish equities. Europe offers relatively cheap stocks, but also offers prolonged economic/political uncertainty and the promise of (significantly?) poorer corporate results to come. Ireland’s stocks are just as cheap, but already have a few years of recession already embedded into their results & business models. So, just about any kind of bad news is already priced in..!

On a micro level, I homed in on buying even cheaper Irish stocks, with dependable businesses, good management and fortress balance sheets (large cash holdings, with little/no debt). With these attributes, I can comfortably wait for recovery, or a specific stock event… Sure, a decent/full recovery may be years away yet, but if Europe’s politicians really do get their shit together, I’ve plenty of free upside to enjoy!

I’m pleased to see the out-performance on both portfolios at this point. In fact, looking more closely at my actual portfolio results, and scanning above, I continue to penalize myself a little. For example, if I add back Argo Group‘s recent/huge GBP 1.3p annual dividend (btw covered by net cash for years to come), it would eliminate the (9.5)% loss listed above. I suspect I’m probably ahead on Richland Resources, having realized a quick 65% on part of my stake as it rallied sharply just after my writeup.

Most of all, my portfolio weightings appear to have made a definite contribution – generally, my larger stocks have provided the gains, while the smaller holdings have delivered losses. But this may not prove the case in the future. And trying to track performance to the nth degree at this point is getting a little too analYes, that’s what she said!

 

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