Sunday, August 31, 2008

Monthly Review - August 2008

August was the third successive month in which my investments declined in value. It was scant comfort to note that the loss was entirely attributable to adverse currency movements (in local currencies, my investments recovered a token amount of the losses of the preceding two months). My savings were sufficiently robust to tip the net result for the month into positive territory.

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 was reduced by a strong recovery in the Vietnamese stock market;

2. my equity ETFs generally went sideways. I currently have exposure to Hong Kong and India. My exposure to Hong Kong was increased during the month;

3. my residual equity portfolio appreciated in local currency terms but ended up losing money due to adverse exchange rate movements;

4. my commodity investments lost money, a situation that was compounded by my attempt to pick a short term bottom in silver;

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). That happy situation will come to an end in September when one tenant vacates. I also got stuck with a large bill (due next month) to replace two air conditioning units in another property. Even with the vacancy and the additional expense, the portfolio should still be close to break even on a cash flow basis and make a positive contribution to my net worth each month;

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

The only investments made this month were a purchase of HK Tracker units and some silver. My income was in at the high end of expectations this month. My spending was in the low range. The resulting savings were more than previous months and helped to produce an increase in net worth of 0.3% for the month. The year to date increase is 6.1%.

Looking forward, a slowing global economy is starting to impact my earnings and I have revised my estimated income down by a slightly arbitrary 10% going forward. Unless I decide to cut back on loving expenses, this will result in a reduced savings rate in the future.

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