Monthly Review - July 2008

July was another ugly month. While not as awful as June, it was the second month in a row that my net worth declined. This is the first time this has happened since I started keeping monthly records in January 2007.

As a group, my mark to market investments largely went sideways and showed a small net loss. Adverse currency movements amplified the losses and were the biggest contributor to the overall decline.

Here are the details:

1. my actively managed funds were mixed. I currently have investments in actively managed funds investing in Thailand, Taiwan, Eastern Small Companies, European Small Companies and Vietnam. The loss on the Vietnam fund is now approaching 50% of the capital invested. It is unlikely that I will invest in another fund that effectively locks me in for several years;

2. my equity ETFs recovered some of last month's losses. I currently have exposure to Hong Kong and India

3. my residual equity portfolio fell;

4. my commodity investments showed very marginal decline with a loss on my commodities fund slightly outweighing small gains in my Nickel and Lean Hogs ETCs;

5. my properties are all fully rented and tenants are paying the rent on time. I have both a positive cash flow and a surplus of income over expenses (which represents an increase in net worth). Although some of the reductions in interest rates have been slightly reversed with the rise in HIBOR, the cash flows remain positive;

6. currency movements were adverse (the USD recovered some of its losses) and were the biggest single factor in the net loss for the month.

The only investment made this month was a small subscription for an RMB bond issue. My income was in at the low end of expectations this month. My spending was in the mid range. The resulting savings were less than previous months but still helped to offset the effects of the losses on my investments.

The end result was a decrease in net worth of 0.3% for the month. The year to date increase is 5.8%. Looking forward, it has been several months since I made any meaningful investments and my cash holding has been building up. With inflation running at 5.4% officially and deposit rates still at close to zero, cash is depreciating quite rapidly and finding suitable investments is something of an imperative. The difficulty is finding somewhere attractive to invest the money.