Back in January I wrote a piece entitled 'how not to lose money', wherein I showed that a simple balanced portfolio achieved reasonable returns with relatively little risk. Subsequent events have at least given us a test of my hypothesis. So how has it held up?
Not too badly. As I write (on 26 March), that portfolio has lost only 3.3 per cent so far this year. That compares with a fall in the All-Share index of 26.1 per cent.
Granted, this doesn’t quite live up to the hubristic title of that piece – although the portfolio is up by 4.6 per cent on a year ago, and a slightly lower equity weighting would have prevented any loss. Nevertheless, such a loss is not abnormal. Based on the portfolio’s performance since 1990, it’s the sort of fall we’d expect to see in one three-month period out of every 13. And, indeed, there have been many times in the past when the portfolio did worse than this. Looking at our portfolio alone, you would never guess that the past few weeks have been some of the most traumatic in recent history.