Update No. 150 – 15/02/14

We have a special treat for our 150th investor update. I have written a contribution to a monthly investment newsletter. In order to read my ‘words of wisdom’, you will need to sign up for the free trial here – http://www.mr-market.com.au/ If you find – as I have – that the letter is a good deal more interesting and relevant than the majority of similar newsletters, then you might consider signing up for the subscription once your trial ends.

A brief word on this week’s results… I have said before that in a week (or month – or possibly year) where the market makes an unusually rapid run, EGP are likely to struggle to keep up. The 3.69% move in the benchmark this week definitely counts as a rapid run. This move was the 4th largest by the benchmark since EGP’s inception, and although we squeezed a 2.76% gain for the week, we were still soundly beaten and only just retain our lead over the benchmark since January 1st.

In fact there have been 18 weeks since inception when the market has risen by more than 2% in a week. We have been beaten by the market in 17 of these weeks, often by much wider margins than this week.

There have been 14 weeks when the market declined by more than 2% since inception, we have never been beaten (yet) in a week when the market declines by more than 2%. I think this reflects the relative stability of our portfolio as compared to the market, but perhaps I’m just looking for an excuse why we were soundly beaten this week…

In any case, it seems to have worked out OK so far. To be sure, if our holdings bounced around more than the market, I would not be concerned; the target is sound results over longer periods, but in terms of the way risk is traditionally measured (volatility) we are more stable than the market to date. We did a little bit of buying and a little bit of selling this week (I will discuss this in the next few weeks), but we remain over 20% in cash.

February (and the first week or two of March) and August (plus a little of September) are usually our best buying times. When results are announced, unwarranted movements in the price of stocks often occur, over reactions to a weak or strong half can create opportunities these times of year. For someone who follows the market closely, it is a wonderful time – Tony Hansen 

EGP Fund No. 1 Pty Ltd. Up by 0.29%, leading the benchmark by 0.13% since January 1^st. Since inception, EGP Fund No. 1 Pty Ltd is Up by 64.77%, leading the benchmark by 39.31% all-time (April 1^st 2011).

^{*1 after 31May 2013 dividend of 2.333 cents per share plus 1 cent per share Franking Credit}

^{*2 calculated based on dividends reinvested}