Friday, October 03, 2008

Monthly Review - September 2008

A bloodbath.

September was the fourth successive month in which my investments declined in value. It was also the worst of the four months in terms of investment losses.

In financial terms, my investments declined sharply, the currency moved against me and my income fell (again). To add to the pain, HIBOR jumped by about 1% which has increased the cost of some of my mortgages and the banks have finally reduced the mortgagee values of Hong Kong residential prices.

In effect the rise of emerging markets, the rise in Hong Kong property prices, the rise of commodities and the fall of the USD which had combined to work so strongly in my favour for four years have all gone sharply into reverse.

Here are the details:

1. my actively managed funds all lost money. I am now holding losses on all of them. I currently have investments in actively managed funds investing in Thailand, Taiwan, Eastern Small Companies, European Small Companies and Vietnam;

2. my equity ETFs all lost money. I currently have exposure to Hong Kong and India;

3. my residual equity portfolio lost money local currency terms and lost more money due to adverse exchange rate movements;

4. my commodity investments lost money/ Fortunately, I only have positions in nickel and lean hogs left and these are very small (even smaller now that they have declined so far);

5. I have one vacant property (which will be occupied in two weeks time). However, the remaining properties are all fully rented and the 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). I also got stuck with two large bills (i) to touch up the vacant flat and (ii( to replace two air conditioning units in another property;

6. currency movements were adverse as the USD strengthened and compounded the loss on my investments this month.

The only investment made this month was a profitable day trade in warrants linked to the Hang Seng Index. Regrettably, the amount involved was insignificant.

My income declined during the month and is expected to decline further over the next few months. My spending was in the moderate. The resulting savings did not even come close to matching the losses on my investments.

For the month, my net worth decreased by 4.08%. The year to date increase is now a very anemic 1.85%. There is now a very real possibility of my net worth showing an overall decline for this year.

Looking forward, a slowing global economy will continue to impact my earnings and I have revised my estimated income down again and expect my monthly income to be 15-20% less than its peak earlier this year. Unless I decide to cut back on living expenses, this will result in a reduced savings rate in the future.

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