LM portfolio as at 31/12/2021:
| Code | Sector | Date Bought | Cost | Value | Gain/Loss |
|---|---|---|---|---|---|
| LM028 LM028-2 |
'No specific industry' | 16/11/2020 10/08/2021 |
£2280 | £3220 | 41.30% |
| LM037 LM037-2 |
Life Insurance | 03/03/2021 05/07/2021 |
£2290 | £2730 | 19.31% |
| LM038 | Banks | 10/03/2021 | £1020 | £1190 | 16.67% |
| LM039 | Pharmaceuticals & Biotechnology | 30/03/2021 | £1030 | £1180 | 14.71% |
| LM040 LM040-2 |
General Financial | 27/04/2021 22/11/2021 |
£2290 | £2860 | 24.90% |
| LM041 | Real Estate Investment Trusts | 27/07/2021 | £1270 | £1500 | 18.39% |
| LM042 | Construction & Materials | 27/07/2021 | £1270 | £1460 | 14.79% |
| LM045 | Gas, Water & Multiutilities | 06/12/2021 | £1280 | £1260 | (0.88%) |
| LM046 | 'No specific industry' | 29/12/2021 | £1270 | £1230 | (3.15%) |
The FTSE 100 did well in 2021. By my reckoning it was up about 14.3%.
The 250 was up a similar amount - around 14.6%.
So a very good year for the UK markets. And as it primarily trades UK shares, the LISA Millionaire portfolio should also have performed well...
This week I had a dilemma. I have a new system I would like to test and I found a share with which to test it.
Now this wasn't a snap decision, I've been watching the share for several weeks and keeping track of its progress in a spreadsheet. It had to hit a certain point before I could consider buying it and it managed to meet the criteria for purchase last week, according to the rules I had decided upon.
It's a pure recovery play. The price has fallen drastically over the past year but is now showing signs of a potential recovery. I certainly wasn't going to randomly try and pick the bottom - as many people appeared to have done judging by comments on a forum I visit - but I think at this level it is now worth a punt.
However, I also feel that it's a little bit flakey and if there isn't very good news at the next trading update it may tumble again.
There is a chance that the fall in share price may have gone too far. I feel like I might be suffering from FOMO (fear of missing out) but then on the other hand there is also a very real fear that I may lose money by being too hasty.
Whilst I certainly never want to lose money, for this LISA Millionaire experiment to work I need to take risks. 18% yearly returns do not come from savings accounts.
To cut a long story short, the FOMO won in the end and I invested one unit in the share in question (LM046 in the table above).
Let's just say I will be keeping a close eye on this position, although not exceeding the one check a day I do on my positions. In fact, for the first time in this LM fund I am going to put in an automatic stop-loss to make sure I am taken out of the trade the minute it touches whatever level I decide upon.
Once that stop-loss is in, and as long as the share price moves up, I will move the stop-loss up in the hope of eventually getting to the point where I make a profit even if I am stopped out. It's the tool that Darvas loved to use, called a trailing stop-loss, and he made millions so I would be a fool not to listen to his advice.
Obviously if this trade works then I will use the method again. And if it doesn't work I will learn a lesson but almost certainly try it again and again with different shares. At some point it will work and if I keep the losses small and run the winning trades then the profit will surely come with it.
2021 results
And so we come to results time. How did the experiment do in 2021?
At the end of 2020 the LM portfolio's value was £17,330 and in 2021 a total of £2,500 was added - £2,000 paid in and £500 in bonus.
The value at the close of business on 31/12/2021 was £24,230. With back-of-the-envelope calculations I make that a gain of around 25.4%.
The FTSE 100 did great and the FTSE 250 pulled a similar return. However, it's fair to say that the LM fund comprehensively beat the return of both indices. And this is what I would want to see. After all, if it is not beating the indices each year then I would be better off simply buying a FTSE 100 tracker ETF and saving a lot of time!
2021 started with around 50% of the fund invested and 7 open positions. Not including pyramids to existing trades, 14 new positions were opened and a total of 12 positions were closed.
Notable winners included a 3 unit trade in Brent Crude Oil (PBRT, LM030) and a 2 unit purchase of Royal Mail (RMG, LM032).
As per the rules, losing trades were kept small. Total loss on the 5 losing trades was just less than £500.
We enter 2022 with just one position surviving from the beginning of 2021 - LM028 - and we are about 75% invested following a pyramid on LM038 this morning.
Happy New Year to all readers - if there are any - and good luck with all your investment decisions in 2022.