Saturday, November 01, 2008

Monthly Review - October 2008

October was the fifth successive month in which my investments declined in value. It was also the worst of the five months in terms of investment losses. In financial terms, my investments declined sharply (again), the currency moved against me (again) and my income fell (again).

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 and the trends seem to be accelerating.

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. In a demonstration of the high beta nature of emerging markets and the leverage of the currency factor, some of my funds are down about 50% in HKD/USD terms;

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. all my 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);

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

No investments were made in October.

My income once again declined during the month and is expected to decline further over the next few months. My expectation is that my income will decline by at least 20% from its peak.

My spending was moderate. The resulting savings did not even come close to matching the losses on my investments. For the month, my net worth decreased by 6.34%. The year to date decrease is 4.6%.

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